Ebook: Economics of the Public Sector

The sequence we follow is to introduce in Parts 1 and 2, the fundamental questions, institutional details, and a review of the microeconomic theory underlying the role of the public sector. Part 3 develops the theory of public expenditures, including public goods, public choice, and bureaucracy, while Part 4 applies the theory of the five largest areas of public expenditure in the United States: health, defense, education, Social Security, and welfare programs. Parts 5 and 6 repeat this pattern, presenting the theory of taxation and its analysis, respectively. Part 7 takes up two additional topics: issues concerning state and local taxation and expenditure and fiscal federalism; and issues concerning fiscal policy, with particular emphasis on the relation between microeconomic analysis and macroeconomic performance. The ups and downs of the deficit are among the major changes we confront in this book. In the first two editions, deficits were at the center of attention, but then, in the third edition, the deficits changed to surpluses. As I noted then, there was a risk that this change would be temporary, and so it was, and deficits are once again part of the economic debate. In this edition, we try to come to an understanding of these marked fluctuations in the U.S. deficits.