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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Is a universal basic income possible in the United States?
Is a universal basic income or unconditional demogrant possible in the United States? (For the sake of specificity I have focused the question on the US, though the question is certainly interesting ...
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answers
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What benefits do governments receive from not eliminating debt?
Most major economies have substantial government debt; for example among the OECD countries the lowest debt rate is Estonia with around 6% of GDP. Now we may be in a global recession at the moment, ...
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Unemployment and the Minimum Wage---what are the main counter-arguments to Card and Krueger?
Card and Krueger's paper (AER 1994, "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania") uses a difference-in-difference identification strategy to ...
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answers
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Why is capital income taxed differently than wage income?
Why is income from capital gains taxed differently than wage income? There are perhaps historical, practical, and theoretical reasons. What are they?
(As far as historical reason go, I'm asking ...
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7
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Economic policies to decrease obesity (would they be effective?)
According to the Center for Disease Control and Prevention, approximately 35% of adults in the United States are obese. I have done much research on the topic of economic policies to reduce obesity (I ...
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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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Are the figures quoted in this liblabcon's blog post accurate? (topic: UK banks)
Background
With regards to the UK government.
I have recently been involved in a debate stemming from figures mentioned in this blog post (the blogger was advocated by Occupy London's facebook page ...
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How is Singapore able to provide first-world public services, given its low income tax rate?
Singapore has a relatively low personal income tax rate. Somebody who earns $80,000 after deductions only pay 3,350 in taxes, or about 4% effective rate (see 2012-2016 tax table). 80,000 is already ...
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Why don't public transport networks have more routes to each terminal in order to reduce the number of transfers?
When using public transport, we often need to transfer to a different route during of the journey. These transfers have costs – I can think of the following, but there may be more.
If we're reading, ...
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What models exists for explaining the price of nonrenewable resources?
It seems to me that the seminal model for the price of nonrenewable resources is Hotelling's rule. However, as the Wikipedia article describes, Hotelling's rule has empirically performed poorly. I ...
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Simple Sketch of Mirrlees 1971
Mirrlees' 1971 paper (An Exploration in the Theory of Optimum Income Taxation) on optimal taxation can sometimes be hard to follow. Does anybody know of (or could even provide here) a simple sketch of ...
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Policy relevance of the optimal taxation given uncertainty about social welfare specification
One common criticism in the optimal taxation literature is the specification of the social welfare function. The optimal taxation literature (I have the Mirrlees framework in mind) relies on first ...
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answer
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What is William Nordhaus' contribution to the economics of climate change?
I'm trying to understand more about the economic repercussions of climate change. I'm unfamiliar with the specifics of the work of William Nordhaus, but it's been predicted in several instances that ...
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1
answer
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What are some good advanced level textbooks on public economics?
I'm taking a public policy course and the textbooks that were recommended for the course are way out of sync with the course material. These are:
Gruber, Public Finance and Public Policy
Stiglitz, ...
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answer
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Minimum wage vs wage subsdies
Many politicians argue that the minimum wage is essential for providing an sufficient standard of living to all. However, there are many issues binding price floors predicted by standard supply and ...
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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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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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Why is government debt level presented as ratio to GDP, not against government budget or revenue size?
A country's public debt is often presented as ratio to GDP. For example, in Wikipedia, List of countries by public debt or National debt of the United States both use ratio or percentages of GDP.
...
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Is my logic on taxation for this question legit?
At Fenway Park, home of the Boston Red Sox, seating is limited to 39,000. Hence, the number of tickets issued is fixed at that figure. Seeing a golden opportunity to raise revenue, the City of Boston ...
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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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1
answer
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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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4
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Why do government jobs provide better benefits than industry jobs?
I've noticed how government jobs in the US are known to have generous pensions, healthcare plans, vacation time, etc. as compared to the corresponding job in the private sector. (I haven't actually ...
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1
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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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Is information technology going to turn most "common goods" into private goods?
Common goods, (not public) are so because they are non-excludable and rival. Often this reflects the impracticality of excluding some users, rather than an absolute impossibility. For example, a park ...
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Gelman and Hill's Data on Effects of Child Support Enforcement
In Gelman and Hill's 2007 book, Data Analysis Using Regression and Multilevel/Hierarchical Models, chapter 11 begins the exploration of multilevel models. To do so, they introduce a data set that ...
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votes
1
answer
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Effects of ACA individual mandate vs AHCA surcharge
The US Congress is currently considering a new healthcare bill, the AHCA, which would replace the existing healthcare bill, the ACA.
One of the major changes is the way each bill encourages people to ...
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2
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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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Do countries invest in the country's own stock market?
For example can the government of the UK invest in some company with shares in the FTSE 100? Or can Russia take the opportunity now that the shares of oil companies are low to buy them?
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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 ...
user40867
3
votes
1
answer
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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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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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3
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Does the government have a role to play in certifying people's abilities for the labor market?
The nature of information often makes it look like a public good. Is this the case for certification of peoples abilities? Is there a role the government could play in certifying people's abilities? ...
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Effect of specific tax on demand and supply
There are intersecting supply and demand curves. A tax is levied on suppliers. Say the tax is a fixed tax (for example, VAT) and not an ad valorem tax.
Why can we not just move along the demand ...
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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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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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Joint Dynamic Programming: Group Activity
Here we have two agents who can spend their time doing some group activity ($h$) or staying at home ($l$). Each agent $i$ is trying to maximize their respective dynamic programming problem:
\begin{...
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0
answers
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Optimal commodity taxation - solving for the optimal tax rates?
I need to solve for optimal tax rates for two products.
In my model there are N identical households that maximize their utility function subject to a budget ...
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votes
2
answers
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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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votes
2
answers
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Why is a cash expense deducted but an expense in-kind not?
Say I am self employed and want a website for my business.
If I pay someone for the service I can, in most cases, deduct this from my profit to reduce my tax burden.
If I forego billable hours or I ...
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1
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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?
2
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1
answer
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Contest game: second order condition satisfied, but negative profits?
The following is taken from Nti (1999)
Consider a 2 player game in which each exerts effort in attempt to win a prize. Let $V_1$ be player $1$'s valuation of the prize and let $V_2$ be player $2$'s ...
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Can a spending freeze solve the problem of the Italian enormous government debt?
In view of the upcoming Italian general election, I've been reading the program of a party (please let me know in the comments whether I can/should mention its name), and in a section of it they ...
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answer
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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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0
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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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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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0
answers
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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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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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Isn't it trivial that preferences are single-peaked over two alternatives?
I'm studying Down's Median Voter Theorem which states that if voters have single-peaked preferences over two alternatives arranged along a one-dimensional political spectrum, a majority rule voting ...
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Net Neutrality and Recent Telecom Projects
It has come to my attention that the big telecom providers are launching some big infrastructural projects recently (at the time of post, Jan. 2018). I presume by that they mean talking laying cables ...
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0
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Pigouvian subsidies for non-linear marginal external benefits
Suppose an agent is choosing how much $x$ to consume and $p_x=200$. If the agent's marginal private benefit is $MPB(x)=300/x$ and $x$ takes only integer values, then he will choose to purchase just ...
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