Public Finance

A Normative Theory


  • Richard Tresch, Boston College, Massachusetts, U.S.A.

Public Finance remains the premier textbook on the normative theory of government policy, with the third edition propelling into the twenty-first century its examination of what government ought to be doing instead of what it is doing.

The welfare aspects of public economics receive extensively renewed examination in this third edition. With four new chapters and other significant revisions, it presents detailed and comprehensive coverage of theoretical literature, empirical work, environmental issues, social insurance, behavioral economics, and international tax issues. With increased emphasis on the European Union, it is rigid enough for use by PhDs while being accessible to students less well trained in math.

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Advanced undergraduate and graduate students studying public finance and public economics, and more broadly welfare economics.


Book information

  • Published: November 2014
  • ISBN: 978-0-12-415834-4


"I have hoped for years that Richard Tresch would revise his Public Finance text.  This volume is well worth the wait.  It is comprehensive, up-to-date, and very clearly written.  It is a natural reading for a graduate course in public finance.  It will also serve as a fine reference for specialists in the field."  --Harvey Rosen, Princeton University, USA

Table of Contents

Part I: Introduction: The Content and Methodology of Public Sector Theory

Chapter 1: Introduction to Normative Public Sector Theory

Chapter 2: A General Equilibrium Model for Public Sector Analysis

Chapter 3: First-Best and Second-Best Analysis and the Political Economy of
Public Sector Economics

Part II: The Theory of Public Expenditures and Taxation-First-Best Analysis

Chapter 4: The Social Welfare Function in Policy Analysis

Chapter 5: The Problem of Externalities--An Overview

Chapter 6: Consumption Externalities

Chapter 7: Production Externalities

Chapter 8: Global Warming: An Application of Externality Theory

Chapter 9: The Theory of Decreasing Cost Production

Chapter 10: The First-Best Theory of Taxation

Chapter 11: Applying First-Best Principles of Taxation-What to Tax and How

Part III: The Theory of Public Expenditures and Taxation: Second-Best Analysis

Chapter 12: Introduction to Second-Best Analysis

Chapter 13: The Second-Best Theory of Taxation in One-Consumer Economies
with Linear Production Technology

Chapter 14: The Second-Best Theory of Taxation with General Production
Technologies and Many Consumers

Chapter 15: Taxation Under Asymmetric Information

Chapter 16: The Theory and Measurement of Tax Incidence

Chapter 17: Expenditure Incidence and Economy-Wide Incidence Studies

Chapter 18: The Second-Best Theory of Public Expenditures: Overview

Chapter 19: Transfer Payments and Private Information

Chapter 20: Social Insurance: Medical Care

Chapter 21: Social Insurance: Social Security

Chapter 22: Externalities in a Second-Best Environment

Chapter 23: Decreasing Costs and the Theory of the Second-Best-The Boiteux

Chapter 24: General Production Rules in a Second-Best Environment

Chapter 25: Behavioral Public Sector Economics

Part IV: Fiscal Federalism and International Public Finance

Chapter 26: Optimal Federalism: Sorting the Functions of Government Within
the Fiscal Hierarchy

Chapter 27: Optimal Federalism: The Sorting of People within the Fiscal

Chapter 28: The Role of Grants-in-Aid in a Federalist System of Governments

Chapter 29: International Public Finance