Questions tagged [public-economics]

Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiency and equity.

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How would a country successfully implement UBI?

Universal basic income is the principal that each citizen in a country gets a fixed amount of money from the government which should suffice for an individual to pay for at least his basic needs each ...
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How can I show convexity of this value function?

I have set up an optmization problem as follows: $$V(A)=\max_{l, C} \quad u(C,l)$$ Where the only constraint is as follows: $$C=f(l,A)$$ Here $u$ is the utility function which captures social welfare. ...
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How can I formulate the following optimization problem?

I want to set up an optmiization problem for global warming in which a planner determines how much carbon dioxide gas is emitted. Let's say we reduce this problem down to two periods, then I ...
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How does elasticity of demand of a public good affect tax rate?

Consider a situation with 2 consumers with one private good, and one public good; where consumers are endowed with fixed amount of private good $M_i$, and give up portion of their private good to ...
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Closed form solution for the optimal flat tax

I used to think that Saez (2001) provides an explicit formula for the flat tax (it's framed as the optimal top marginal tax rate, but this is the same thing if the economy has a linear tax schedule). ...
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3 votes
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The optimal tax rate

According to a famous formula (due I believe to Saez), the optimal maximum tax rate $\tau^*$ is given by $$ \tau^* = \frac{1 - \bar{g}}{1 - \bar{g} + ae}$$ where $g$ is the 'average social marginal ...
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Sources for information about Danish general government finances since 2000 (in English)

for a report I have to write about Danish public finances and fiscal policy (budget balance, debt, revenues, expenditures) I'd like detailed information dating back to 2000 or publications giving an ...
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egalitarian PE allocation for public goods

Suppose that there are 2 consumers, 1 private good($x$), 1 public good($y$) exists in this economy. $u^i (x^i , y)=\gamma \ln y +\ln x^i$ and $e^i =\frac{E}{I}$ and $f(z)=z$ where $z$ is the input of ...
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How *should* weigh income/consumption at different income levels (esp. to the very poor vs poor) ... perhaps in a 'social welfare function'?

What is the best analysis/literature/text, that gives a theoretical justification for approaches that can be used in practice, for How we should weight income/consumption at different income levels (...
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How *do* NGOs, think tanks, and governments weigh income/consumption tradeoffs/transfers at different income levels?

In considering policies and transfers, how do we (economists, NGOs, governments & think tanks) weigh income (consumption) tradeoffs between the poor & the very poor? E.g., 'is giving 100 USD/...
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Is Hal Varian's intermediate microeconomic externality graph wrong?

Here is the capture from Hal Varian's Intermediate Microeconomics chapter Externality. I remember clearly my lecturer said this graph is wrong several years ago, but I cannot remember the argument ...
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Is climate change an economic question?

The assumption that the Keeling Curve can be approximated with a function $$k=A+B\cdot e^{\alpha t}$$ leads to a solution with $A=258.6$, $B=4,243\cdot 10^{-13}$ and $\alpha=0.0166$ with a high ...
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Any difference between the DWL results from tax and binding price ceiling, what makes govenment choose one over another?

Same as the title. From the Graphs, I cannot see any difference or what makes policymakers to distinguished those two? Here is the capture from Perloff's textbook. Now compare this with the case that ...
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Pigouvian tax equivalent to Coasian payments

Consider an economy with two goods, $x$ and $y$. Suppose person a's consumption of good $y$ imposes a negative externality on person b. Person a's utility maximisation problem is $$\max_{x_a,y_a} \ ...
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Pigouvian tax with general utility function

Suppose person a's consumption of good $y$ imposes a negative externality on person b. Person a's utility maximisation problem is $$\max_{x_a,y_a} \ u_a(x_a,y_a),$$ subject to $$p_x x_a+p_y y_a=e_a.$$ ...
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Is it always a trade off between efficiency and equity?

Is there any situations where we can achieve both equity and efficiency? I'm thinking of Covid 19 vaccine program which is run by Goverment. Although the cost for the program is paid by the money from ...
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Understanding an article in the BMJ about the sugar tax

The research paper Changes in soft drinks purchased by British households associated with the UK soft drinks industry levy: controlled interrupted time series analysis was examining the impact of the ...
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Event study by Kleven

I was reading the following paper by Henrik Kleven et al. https://www.henrikkleven.com/uploads/3/7/3/1/37310663/kleven-landais-sogaard_nber-w24219_jan2018.pdf The estimate the child penalty on wage ...
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Is there a source which informs the public of who is buying up newly issued U.S. Government debt?

Is there a list somewhere of who is buying the newly issued debt that will finance the American Rescue Plan (the $1.8 trillion stimulus package signed recently)? Of course, I have an idea of who owns ...
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What are the 'Public Account Liabilities' of the Government of India?

In the Quarterly Report on Public Debt Management for the Quarter Jul - Sep 2020 of the Government of India, an increase in 'Public Debt Liabilities' is declared. What are they?
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Total Derivative of a Max Function: Maximizing Social Welfare Function

I'm studying public economics but my question here is purely mathematical in nature. I have a function: $$ V(1-\tau, R) = \max_zu((1-\tau)z+R,z) $$ I need to take the total derivative of this, in my ...
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Formalizing unorganized Sector

This is a fairly basic question. What are the real benefits of formalizing the unorganized sector? What does integrating these into the organized sector achieve other than maybe increased tax revenue ...
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Consumption Externalities in partial equilibrium analysis

I've been working on a standard partial equilibrium with externalities problem and have been having some difficulty with these (relatively) basic concepts. My issue is primarly with solving for Pareto ...
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Is a smartphone app(Non premium or subscribed service like Netflix) a public good?

A smartphone app that provides users with information on surf conditions at their location. (“Surf conditions” refers to information on wind, waves, and ocean tides that is useful for surfers). For ...
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World Bank and OECD statistics unmatch tax revenue as % of GDP

I have been looking for statistics on tax revenue to GDP ratio of different countries. I've found it on World Bank website. https://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?view=chart which ...
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3 votes
2 answers
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What is the opposite of public debt?

The opposite of a budget deficit is a budget surplus But what is the opposite of public debt? Instead of govt/state being in debt, having the government have extra money to keep or to lend it to banks ...
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What are concrete values of public goods?

Are there any good studies on what are estimated values of public goods? For example, suppose a public library, bridge, school, or lighthouse is a public good, what is the value per person for these ...
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Do countries with centrally-planned economy have Entrepreneurship as a factor of production?

Let's don't count self-employed people without other employees (like "lone wolf" craftsmen) and people who have an illegal business as entrepreneurs. By centrally-planed economy I mean an ...
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2 votes
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Coase theorem study material

I'd like to read a more detailed/mathematical analysis on the subject of Coase's theorem. Could you perhaps suggest any advanced textbook/paper on the matter?
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Unions, right to work laws [closed]

Can anyone explain what right to work laws are? along with any thoughts about unions. Do they actually benefit the worker and overall market? Thank you.
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Can I use the released data on AER and JPE in my own research without permission?

I don't think JPE has suggested a specific license. However, the journal did say that the data policy is adopted from American Economic Review (AER). AER did suggest a license of Creative Commons ...
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Efficiency-related reason for net social benefits from income taxation

Found a question that I cannot really find an answer to. I am being asked to consider an economy with many households and assume that the government can only generate revenue by taxing households' ...
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utility from providing public good as explained in Hindriks textbook

I think I understood the highlighted part: basically, by increasing $g^1$ my utility increases because more public good is being provided but at the same time it decreases because I have less money to ...
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1 answer
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Papers on the rate of returns for government-run pension plans

I'm looking for papers studying the implied rate of return for various government pension programs around the world. Both historical and expected returns. Or any study that looks at the taxes for the ...
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1 vote
1 answer
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Equity-efficiency tradeoff examples

What could be an example of equity-efficiency tradeoff in healthcare, social protection or defense? For environment I did think of pollution permits that can cause geographical differences in ...
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Empirically checking efficiency and equity

I am aware that because of externalities or public goods (or for other reasons) there can be no allocative efficiency on the market. I am also aware that policy makers' subjective judgement of the ...
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nash equilibrium public good - is this correct? [closed]

Two players, 1 and 2, simultaneously choose their consumption of a public good. Given the consumption choices, g1 and g2, player 1 derives a marginal benefit of MB1 = 10 - (g1 + g2), while player 2's ...
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Sign of income effect is ambiguous

When discussing the standard neoclassical model of labor supply, I have seen it is assumed that the sign of the income effect is ambiguous. Could anyone please explain this assumption, and more ...
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Show that this income tax is effectively a lump sum tax

This is a standard income, leisure tradeoff model. $$ \max_{c,l} \min\{c; l\} $$ $$s.t. \space c = w(1-t)(1-l)$$ $l$ is leisure (where total time is 1), $w$ is wage, $c$ is consumption, and $t$ is ...
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Can a progressive marginal taxation be regressive in terms of average tax rate?

Or does progressive marginal taxation imply that it is a progressive average taxation? Here, I mean that if $T(Y)$ is a tax function of income, marginal tax rate would be $dT/dY$ and average tax rate ...
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Would apprenticeships improve the economy long term?

Evening my name is Nick and I am a high school student from Fairfield California and I’m 17, my super hyper theatrical question is about a substitute to college in order to create more efficiency in ...
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Does the 2nd welfare theorem involve government intervention? [closed]

How is the initial redistribution of resources carried out?
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13 votes
1 answer
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Nash equilibrium - mistake in proof of paper?

I have a question regarding the proof of Proposition 1 in Besley and Ghatak (2007) in Appendix A of their paper. It is a quite highly cited paper but I believe there is a mistake in the proof of their ...
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Why is the USA not capable to pay its debt?

Why is the USA not capable to pay its public debt on its own? The country needs to create new debt in order to pay its due debt. Not only that, but the debt is also only increasing and the country ...
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Is it possible to pay the internal debt of the country and to cover the budget deficit by increasing taxes?

Say for example the US govt. is putting an extra tax of 10% on the incomes of the people earning more than the average income. To make it easier, only tax the people earning more than 110% of the ...
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Can State Owned Enterprises compete with each other without a private enterprise in a market? Examples

In a domestic market, there exist multiple (around 5) multi-product state-owned enterprises. In a few products, SOEs compete with private enterprises while in the majority of products, the SOEs share ...
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3 votes
2 answers
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"The citizens know their own utility functions better than the politicians"

In informal discussions about public policy, I often hear the claim that the government should not intervene in a certain way, because the citizens know what is good for them better than the ...
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Can the internet be characterized as a public utility?

The idea of what a public utility is, economically, rather than just legally is not a new point of discussion. Philosophers like John Stuart Mill argued for the public provision of water and gas, ...
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Is debt servicing in the structural or cyclical budget balance?

Are the interest payments on government debt to be considered in the structural or the cyclical budget balance? I think, since it's independent on the state of the economy, then they should go to the ...
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How do we determine if wealth will be created or destroyed (and how much) when we want to provide (quasi)public goods?

It seems quite simple under framework of free market, when there are no taxes or subsidies,price celling or price floors, etc, that can mess up the market: if there is profit (or will be, according to ...
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