Contemporary public economics

Abstract

This chapter provides an overview of reasons for and nature of dramatic changes that have taken place in public economics in the past few decades. It gives a brief account of innovations in public economics that have taken place in large part due to developments in economic theory. It is argued that ideas and tools of information theory and game theory have significantly altered the theory and practice of public economics. Developments in the public choice theory and inter temporal analysis also had far reaching impact on way in which economists think about public economics issues and design public policy. These theoretical developments in turn have implications for empirical analysis. The subsequent eight chapters in this book reflect some of these implications. They cover topics such as the targeting of income transfers to the disabled, the control of tax evasion, the efficiency of government, the tendency of the political process to be benevolent towards the electorate, and the role of government in fostering economic growth.