Public economics

Summary

Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiency and equity. Public economics builds on the theory of welfare economics and is ultimately used as a tool to improve social welfare. Welfare can be defined in terms of well-being, prosperity, and overall state of being. Public economics provides a framework for thinking about whether or not the government should participate in economic markets and if so to what extent it should do so. Microeconomic theory is utilized to assess whether the private market is likely to provide efficient outcomes in the absence of governmental interference; this study involves the analysis of government taxation and expenditures. This subject encompasses a host of topics notably market failures such as, public goods, externalities and Imperfect Competition, and the creation and implementation of government policy. Broad methods and topics include: the theory and application of public finance• Richard A. Musgrave, 2008. "public finance," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. • _____, 1959. The Theory of Public Finance: A Study in Public Economy. J.M. Buchanan review, 1st page. Analysis and design of public policy distributional effects of taxation and government expenditures analysis of market failure and government failure. Emphasis is on analytical and scientific methods and normative-ethical analysis, as distinguished from ideology. Examples of topics covered are tax incidence, optimal taxation, and the theory of public goods. The Journal of Economic Literature (JEL) classification codes are one way categorizing the range of economics subjects. There, Public Economics, one of 19 primary classifications, has 8 categories.