Theory Of Public Finance Research Articles

Economic Impact of Major Sporting Events on Local Economies

Purpose: This study sought to explore the economic impact of major sporting events on local economies. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to the economic impact of major sporting events on local economies. Preliminary empirical review revealed that while such events often yielded significant short-term economic benefits, including increased tourism revenue and job creation, their long-term sustainability remained uncertain due to common challenges like cost overruns and underutilized infrastructure. Factors such as event scale, location, and management influenced the extent of economic impact, with effective planning and stakeholder engagement playing crucial roles. Legacy planning and sustainable development strategies were deemed essential for maximizing economic benefits beyond the event itself, with a focus on inclusivity and social equity. The study emphasized the importance of ongoing research and evaluation to inform future decision-making processes regarding event hosting and resource allocation. Unique Contribution to Theory, Practice and Policy: The Urban Economics theory, Tourism Economics theory and Public Finance theory may be used to anchor future studies on the economic impact of major sporting events on local economies. Researchers emphasized the importance of conducting comprehensive economic impact assessments prior to hosting events, facilitating informed decision-making. Legacy planning and sustainable development strategies were advocated to ensure that event-related investments contributed to long-term economic development. Stakeholder engagement and collaboration were prioritized to distribute economic benefits equitably. Diversifying revenue streams and leveraging ancillary economic opportunities were recommended to maximize economic benefits. Additionally, promoting destination branding and tourism development was highlighted as a key strategy for attracting investment and business opportunities. Policymakers were advised to adopt a holistic approach to event planning, integrating economic, social, cultural, and environmental considerations to host successful and sustainable events.

Use and Abuse of the Concept of ‘Excess Burden’ in the Theory of Public Finance

Optimal tax theory assigns two roles to the measure of excess burden, one to compare the costs of alternative tax instruments, the other to measure the deadweight loss of specific tax instruments, which presumably correspond to the welfare costs of their distortionary effects. This paper claims that the deadweight loss provides misleading measures of welfare costs from tax distortions, because it requires to make unverified assumptions to equate costs to distortions and ensure that the deadweight loss is greater than zero. Taxes other than the lump-sum tax and tax-induced changes in relative prices cannot generally be assumed to be distortionary.

State-market entanglement: some implications for the theory of public finance

State-market entanglement: some implications for the theory of public finance

The Size of Tax Jurisdiction and Tax Density

Theoretical background: Theory of public finance theory quite widely recognized that the purest indicator of government size is to observe the determinants and trend of level of public spending. It could be easy translates into the statement that following demand of government for money, first satisfied by taxes, enables to conclude, in particular, that the ratio of tax revenues to gross domestic product is the most appropriate indicator of the fiscal efficiency of the tax system. Purpose of the article: The very aim of paper is to determine, on the basis of constructed original taxation density rate, the diversification of the spatial economics of local revenues from taxation of land and developments. The supplementary goal comes from the identification of attributes of tax jurisdiction size shaping density of taxation. In particular, it is undertaken to determine whether there is a statistically significant difference in the rudimentary statistics of the correlation between the size of tax jurisdiction and intensity of land and development taxation measured by brand new index: tax density. Research methods: The research methods, apart from the query and analysis of the literature on the subject, are descriptive statistics of the population of 2,477 communes in Poland in terms of taxation density and the strength of the correlation between taxation density and attributes of tax jurisdiction defined by its size in both fiscal perspective (total tax revenues, tax revenues per capita) and demographic indexes (population, population density). The area of tax jurisdiction is correspondingly discussed. There is also employed OLS method for study correlation between tax density and indexes of tax jurisdiction size. The data are for the fiscal year of 2021. Main findings: Taxation density is, on average, the highest in urban communes, which results from a significant share of land and improvements subject to property tax. In urban communes, the share of real estate tax is on average 98.91% of total revenues from taxation of land and improvements. While in rural communes, where the lowest average level density of taxation has been recorded, the share in question is on average 73.73%. Examination of taxation density statistics for each of three subpopulations of communes (urban ones, urban-rural ones, and rural ones) indicates that in each case statistics of the distribution of tax density is attributed by positive skew and has sharper peak around the mean, but kurtosis is the highest for rural communes. It has been observed that the shapes of the distribution of total tax revenues, tax revenues per capita and population density are most similar to the shape of the distribution of taxation density in rural communes. The crucial conclusion is that the most significance for tax density growth is the increase of population in accordance with population density. The greater tax jurisdiction measured by population the greater intensity of fiscal exploitation of land occurs. Empirics of tax density for Polish communes fails to observe diseconomies of scale according to population density. There is a very parallel structure of elasticity of tax density for different features of tax jurisdiction, excluding for urban tax jurisdiction two attributes: tax revenues per capita (no statistical significant evidence of elasticity) and area (in contrast to another types of communes elasticity is positive).

Economic Sustainability of Air Transportation in Terms of Unfair Competition and Negative Externalities: Evidence from Turkish Commercial Law

Air transportation is a more advantageous form of transportation compared to other types of transportation. This is because it provides economic growth, place, and time benefits. However, the realization of the economic sustainability of these benefits may become difficult in certain cases. It is possible to express these situations as negative externalities in the theory of public finance. The solution to negative externalities lies in their internalization. Unfair competition is also a negative externality for air transport enterprises. One of the sanctions applied for the internalization of this negative externality is compensation. While material compensation can internalize externalities, moral compensation cannot fully compensate for externalities in a number of cases. Such a situation may constitute a violation of the rule that externalities will not be reflected in market prices. In order to understand whether such a rule violation actually occurred judicial decisions were examined using the comparison method in the study. The conclusion reached in the study is that in a few cases externalities are likely to be reflected in market prices and reveal a violation of a rule related to the theory of public finance. To ensure economic sustainability of air transportation, moral compensation decisions that have the potential not to reflect externalities to market prices must be fully determined.

Viability of the Political System: A Neglected Issue in Public Finance

A classic statement of the pure theory of public finance was formulated circa 45 years ago by Richard Musgrave (Musgrave 1959). He conceptualized the role of public finance as falling into three primary functions of government: (a) to provide for public goods, (b) to provide for an equitable distribution of income, and (c) to stabilize the economy. In its simplicity, this tripartite division “has been invaluable” and remains the “gold standard” in economics to this day. But is something missing? The author argues that we badly neglect distribution.

Public finance in modern Ukraine: theoretical and practical aspect

Introduction. In this article we analyze the sphere of public finance in Ukraine. In the theoretical aspect, domestic financial science does not pay enough attention to issues related to the conflicting combination of economics and politics in public finance, the interplay of political and financial theories in this field, and the application of behavioral models of various public finance subjects in scientific research. At the same time, there is a need for clarification of the structure and nature of public finance. Objective. To define the essence and structure of public finance based on well-established theoretical postulates; to investigate main trends in its development, problems, and ways of improvement in modern Ukraine using statistical data. Results. Foreign and domestic scholars not only interpret the concept of "public finance" differently but also include various components in it. Public finance is defined as the total amount of society's always limited monetary resources at the disposal of the state authorities and local self-government. Its formation and use require accompanying institutional and organizational activities based on the scientific groundwork produced by public finance theory. Over the past five years public finance in Ukraine has been characterized by conflicting trends with the defining factors being the global Covid-19 pandemic and Russia's full-scale war against Ukraine. In 2022, the share of expenditures of the consolidated budget and the Pension Fund reached a record high of 65.8% of annual GDP. The deficit of the consolidated budget has reached a record level. In these conditions, the government is implementing a forced but well-balanced active debt policy. The existing solidarity-based pension system significantly burdens and adds problems to Ukraine's public finance. Conclusion. To solve a series of accumulated problems in the field of public finance, what is needed first and foremost is peace in Ukraine after its victory. During the post-war reconstruction process, further reforms and measures should be taken to improve the state of public finance and bring it closer to international standards of efficiency, effectiveness, social utility, and security.

State–market entanglement: some implications for the theory of public finance

This article is concerned with the way economists conceptualise the relationship between state and market within their theories of public finance. It is customary for them to treat polity and economy as comprising separate domains of human activity. In contrast, the recently developing notion of entangled political economy treats the state–market dichotomy as an abstraction, whereas political and economic organisations are deeply entangled with one another. While property and its distinction between mine and thine is a universal quality of the human species, specific and particular rights of property are always contestable through entanglement among political and commercial entities. Entanglement calls attention to the processes through which rights of action are established and challenged within an entangled system of political economy. What results from our exploration of entanglement and public finance is recognition of the high analytical potential of reviving Antonio de Viti’s initial interest in transforming the focus of public finance from the practice of public finance into a scientific theory, thereby joining public finance and public choice to form political economy.

Cost Behavior in Local Governments from the Theory of Public Finance Perspective

Purpose – This research aims to analyze in an unprecedented way the behavior of costs in local government, since the current literature is incipient and there are still doubts about the application of the cost stickiness phenomenon to thepure public sector.Theoretical framework – The study approaches cost stickiness from the Theory of Public Finance perspective.Design/methodology/approach – This is an unprecedented, exploratory study with robust panel data regression statistics. We analyzed 295 local governments in southern Brazil over a 16-year period, resulting in 141,600 observations.Findings – All 32 models analyzed showed asymmetric behavior of public costs, with 75% being characterized as cost stickiness (47% sticky and 28% anti-sticky) and 25% as reverse cost (a new phenomenon identified, typical of the public sector, but which can also occur in the private sector).Practical & social implications of research – The main theoretical and practical contributions are: I) proof that the contemporary approach to cost behavior applies to the pure public sector; II) proof that budget balance, a fundamentalprecept of the TFP, does not apply in practice; and III) identification of a new phenomenon, expanding the theoretical classification of cost behavior consolidated in the contemporary accounting approach, which can help managers in planningpublic actions.Originality/value – The main contribution is the identification of a new phenomenon, called reverse cost, expanding the theoretical classification of cost behavior consolidated in the contemporary accounting approach.Keywords: Cost behavior, cost stickiness, reverse cost, cost asymmetry, government costs.

Reimagining geographies of public finance

The study of public finance—the role of government in the economy—has faded in geography as attention to private finance has grown. Disrupting the tendency to fetishize private financial power, this article proposes an expanded conception of public finance that emphasizes its role in shaping geographies of inequality. We conceptualize the relationship between public and private finance as a dynamic interface characterized today by asymmetrical power relations, path-dependent policy solutions, the depoliticization of markets, and uneven distributional effects. A reimagined theory and praxis of public finance can contribute to building abolitionist futures, and geographers are well positioned to advance this project.

GDP and Public Expenditure in Education, Health, and Defense. Empirical Research for Greece

Wagner Law and Keynesian approaches are the two fundamental theories of public finance. The aim of this study is to assess empirical evidence for the public spending–national income relationship at a disaggregated level for the time period 1995–2019. The sectoral public expenditures include education, health, and defense. The data employed were derived by EUROSTAT and OECD. Based on our findings, a sole relationship of the variables was validated, while the causality of the relationship provides conflict results depending on whether two-variate or multivariate methodology is employed. In the case of the multivariate framework that outperforms the two-variate approach in terms of information, the causality is directed from government expenses to the GDP level, validating the Keynesian approach in the long run as well as in the short run. On the other hand, the results validate Wagner Law based on the results of Granger causality pairwise test. A potential interpreatation for the results found is related to the measures imposed by the Memorandum, since the disproportionate cuts of the public expenses in the period of crisis have determined the evolution of national income. The scientific value of the presents study stands on the suggestion of potential effective measures aiming at the limitation of national income shrinkage in periods of severe economic crises worldwide.

Tax Transparency and Social Welfare: The Role of Government Commitment

Although transparency has long been held as the key principle of taxation, recent behavioral public finance theory has shown that it may reduce social welfare as inattention can alleviate behavioral distortions. This paper extends this analysis by modeling inattention as a noise in the tax rate signal received by Bayesian citizens. In equilibrium, we find that transparency will improve social welfare by ensuring the government's ability to commit to a fairly low tax rate that is socially optimal. Moreover, this model yields a new sufficient statistics formula. Based on typical estimates of attention parameters and marginal cost of public funds, this formula suggests that ensuring tax transparency is worth incurring approximately 10 percent of the revenue currently estimated for the U.S. tax system.

Trends in attracting resources to the budgets of regional centers

The paper explores the transformations in the state of the budgets of regional centers to formulate recommendations concerning the development of their budget potential. Methodologically, the paper relies on the theory of public finance, supply-side economics, and spatial economics. Applying economic-statistical, structural, logical, and comparative methods, the author identifies the role of repayable and non-repayable receipts in the budgets of regional centers. The analysis covers the period of 2011–2018, when the budget crisis in the Russian regions triggered significant changes in the system of the intergovernmental relations at municipal level. Critical analysis of the key trends in the formation and use of attracted budget resources of regional centers is performed using the case of the Northwestern Federal District of the Russian Federation. The findings point to an increase in the debt burden from 33 to 52 % of the own revenues of the budgets of the regional capitals; a steady trend towards domination of the funds attracted as gratuitous financial assistance over budgets’ own revenues since 2014; a significant growth in the authority delegated from higher levels. Public authorities and local governments may benefit from the research findings while making decisions meant to improve intergovernmental relations and manage the municipal debt.

The Macroeconomic Effects of Income and Consumption Tax Changes

This paper estimates the effects of exogenous changes in income and consumption taxes. The tax shocks are proxied with a narrative account of tax liability changes in the United Kingdom. Income tax cuts have large effects on GDP, private consumption, and investment. The effects of consumption tax cuts are modest and not statistically significant on GDP and its components. Shifting the burden of taxation from income to consumption is expansionary. Consistent with conventional public finance theories, these results indicate that it is crucial to distinguish between direct and indirect taxation when studying the transmission mechanism of fiscal policy. (JEL E21, E22, E23, H24, H25)

PHILOSOPHICAL FUNDAMENTALS OF THE THEORY OF PUBLIC FINANCE

Introduction. The theory of public finance is based on deep philosophical questions, on the achievements of political economy, political science, and especially on the dominant philo sophical doctrines that explain the processes of existence, consciousness and patterns of their development. The purpose of the article is to investigate the peculiarities of the philosophical foundations of the western theory of public finance in comparison with modern domestic financial science, which still partially adheres to the worldview approaches of the Soviet financial school. Methods. The methods of comparison, logical analysis and abstraction are used in the work. Results. The article considers the key philosophical problems and their impact on the theory of public finance. The role of material and ideal principles for public finances is clarified. The differences between metaphysical and dialectical approaches to the interpretation of financial phenomena are established. The consequences of the confrontation between rationalism and empiricism for financial science are outlined. The advantages and limitations of the inductive and hypothetical-deductive method are revealed. The role of verification and falsification as ways to verify the truth of scientific knowledge has been studied. The differences of ontological and epistemological accents of the western and domestic theory of public finances are revealed. A certain alternative of dialectics and formal logic as research paradigms has been established. The shortcomings of the excessive orientation of domestic science to attempts to formulate concepts and categories in the style of philosophical essentialism, generally rejected in the West, are pointed out. The advantages and limitations of the historical approach in the study of public finance are shown. Conclusions. It is proved that the research basis of the theory of public finance should be the observance of a clear sequence in the philosophical triad: dialectics – logic – metaphysics. It is noted that the prospects for the development of domestic financial science lie in the plane of implementation of the philosophical and methodological achievements of western science while preserving the national identity.

Public finance in postulates of economic schools: genesis of theories

The article aims to study the genesis of public finance theories in the context of social development due to the need to determine the role of the state in providing social services and the efficiency and quality of public goods. The need for research is generated by two aspects: the dependence of the state and vector of public finance development on the historical and political conditions of state development; the need to develop tools, institutions, and procedures in the context of expanding state participation in the provision of social services to the population. Theoretical aspects of determining public and private goods and their place in the theory of public finance are substantiated. The public and private goods are compared and their essential characteristics are revealed. The key features of public goods (non-competitiveness, non-exclusion, indivisibility) are highlighted. The article addresses the peculiarities of scientific approaches to the issue of financing the manufacture and providing public goods to representatives of various scientific schools and trends (classical political economy, fiscal exchange models, theory of economic sociodynamics, libertarian theory, institutional economic theory, new classical macroeconomics, etc). The experience of developed countries in the historical context clearly indicates that despite the diversity and differences of national economic models focusing on different schools of economic theory, there is a constant gradual strengthening of the role of the state in social development. Emphasis is placed on changing the role of the state in modern conditions of forming new priorities and implementing the Sustainable Development Goals that ensure the development of human capital and provide the population with quality public goods. The article substantiates that in modern conditions, the issues of social services efficiency as a guarantee of human capital development, their maximum proximity to consumers, the role of the state and public administration system in the social sphere, and balancing the public finance system in ensuring social and economic progress are increasingly relevant.

Selection criteria for prison locations: Key study of Turkey

AbstractThe theory of public finance suggests that public sector intervention in the economy primarily concerns the efficient allocation of resources, equal distribution of wealth, and stabilization of economic activity throughout the operating cycle. Given that prisons are a public investment, this study identified the criteria involved in selecting the location of prisons in Turkey, a topic that has not been discussed before. The criteria for locating these establishments were analysed using an analytical network process in which the weight of each criterion in the total was determined by conducting a face‐to‐face survey with officials in the justice system who are difficult to access. The results show that political factors (50.89%) had the biggest influence on the location selection of a prison, and the positive impact on economic development of the selected region was only 13.56%. In contrast to the existing literature, location selection in Turkey does not follow the theory of public finance: the economic impacts are not considered, and decisions are taken politically.

Olonite Theory of Public Finance and Economic Growth / Development (2019) Explained

This study analyzed the Keynesian theory of public finance and economic growth and the Wagner’s Law of ever increasing state activities. The study used the secondary data from CBN 2019. The Real Gross Domestic Product formed the dependent variable and the independent variable of interest were the Capital Spending on Economic Services, and Spending of Transfers. The variables were validated by conducting the unit root test using the Augmented Dickey Fuller (ADF) and Phillips Perron Test (PP), and the correlation coefficient were determined using STATA and the Pearson Product Moment Correlation. A multiple regression model was employed for the study and was analysed using the Generalized Least Squares (GLSs) with the aid of Eviews 11 statistical program. The results of the study indicate that Capital Spending on Economic Services has a positive and significant impact on Economic Growth while Spending on Transfer has a negative and insignificant impact on Economic Growth. The study recommends the Olonite Theory of Public Finance and Economic Growth/Development [that Capital Spending on Economic Services should be maintained and increased and Spending on Transfer should be made Zero especially the non performing functions, also, the government should develop the refineries to start mass production in order to null off the negative effect of transfers (subsidy payment on oil import and price equalization)].

Public choice and decentralised healthcare service delivery in Lesotho: Assessing improvement and efficiency in service delivery

Providing efficient decentralised local public services such as healthcare in hard to reach and remote areas has been the recent concern of public finance experts. Thus public finance theory, the p...

PUBLIC PRODUCTION AND INSTITUTIONAL MECHANISM OF FUNCTIONING OF BUDGETARY INSTITUTIONS

Introduction. The study of the functioning of budgetary institutions as producers of public goods and services requires an interdisciplinary view using institutional and transactional analysis, the achievements of the theory of public finance, budget accounting and public administration. Methods. The following methods are used in the article: scientific abstraction in highlighting the essential features of budgetary institutions; comparative analysis, in distinguishing between transaction and transformation costs; systematic approach in explaining the financial, institutional, accounting and management aspects of the functioning of budgetary institutions in the process of public production. Results. Emphasis is placed on the need for conceptual delimitation of budgetary institutions on the basis of their participation in public production into those that directly supply goods and services to the population and those that ensure the functioning of budgetary institutions of the first type. The paper considers the main directions of transactions of budgetary institutions, paying attention to informal transactions and the costs they may cause. It is noted that the total cost of publicly produced products includes both the transformation costs of the budgetary institution - the manufacturer, and transaction costs, which were carried out in stages to the immediate phase of production of goods by budgetary organizations. These are the costs at the stage of public choice (elections, parliamentary activities) and at the stage of its further implementation (functioning of the fiscal entities, treasury system, government borrowing, public procurement, which are transaction costs for budget organizations of the first group). Discussion. According to the author, financial management in the budget sphere should be aimed at assessing and improving the efficiency of public production. This view should be developed in domestic textbooks and academic disciplines. After all, today they are limited to describing the current procedures for planning and implementing estimates, budget funding, without analysing its role in creating value and usefulness for citizens. Keywords: public production, public goods, budgetary institutions, institutional environment, transaction costs, transformation costs, informal transactions.