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Economics of the Public Sector
01 Jan 1986-
TL;DR: In this paper, Stiglitz and Rosengard bring an unparalleled level of expertise to address the key issues of public-sector economics, such as what should be the role of government in society, how should it design its programs, and how tax systems should be designed to promote both efficiency and fairness.
Abstract: What should be the role of government in society? How should it design its programmes? How should tax systems be designed to promote both efficiency and fairness? Nobel Laureate Joseph Stiglitz and new co-author Jay Rosengard bring an unparalleled level of expertise to address these key issues of public-sector economics. No other text is as modern, as accessible, or incorporates as much first-hand policy-advising experience by its authors as Stiglitz/Rosengard.
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TL;DR: In this paper, the authors take issue with those who confine the concept to the process of bailing out loss-making socialist firms and point out how the syndrome can appear in various organizations and forms in many spheres of the economy and points to the various means available for financial rescue.
Abstract: The author’s ideas on the soft budget constraint (SBC) were first expressed in 1976. Much progress has been made in understanding the problem over the ensuing four decades. The study takes issue with those who confine the concept to the process of bailing out loss-making socialist firms. It shows how the syndrome can appear in various organizations and forms in many spheres of the economy and points to the various means available for financial rescue. Single bailouts do not as such generate the SBC syndrome. It develops where the SBC becomes built into expectations. Special heed is paid to features generated by the syndrome in rescuer and rescuee organizations. The study reports on the spread of the syndrome in various periods of the socialist and the capitalist system, in various sectors. The author expresses his views on normative questions and on therapies against the harmful effects. He deals first with actual practice, then places the theory of the SBC in the sphere of ideas and models, showing how it relates to other theoretical trends, including institutional and behavioural economics and theories of moral hazard and inconsistency in time. He shows how far the intellectual apparatus of the SBC has spread in theoretical literature and where it has reached in the process of “canonization” by the economics profession. Finally, he reviews the main research tasks ahead.
1,116 citations
TL;DR: In this paper, the authors identify three sets of strategies leading to the growth of the regulatory state as external or market regulator, and as internal regulator of decentralised administration, and examine major structural changes induced by changes in regulatory strategies.
Abstract: Since the late 1970s European governments have been forced to change their traditional modes of governance in response to such trends as increasing international competition and deepening economic and monetary integration within the European Union. Strategic adaptation to the new realities has resulted in a reduced role for the positive, interventionist state and a corresponding increase in the role of the regulatory state: rule making is replacing taxing and spending. The paper's first part identifies three sets of strategies leading to the growth of the regulatory state as external or market regulator, and as internal regulator of decentralised administration. The second part examines major structural changes induced by changes in regulatory strategies. The institutional and intellectual legacy of the interventionist state is a major impediment to the speedy adjustment of governance structures to new strategies. It would be unwise to underestimate the difficulties of the transition from the positive to the regulatory state, but it is important to realise that international competition takes place not only among producers of goods and services but also, increasingly, among regulatory regimes. Regulatory competition will reward regimes in which institutional innovations do not lag far behind the new strategic choices.
955 citations
TL;DR: In this paper, the authors compare a winner-take-all system to a proportional system, where the spoils of office are split among candidates proportionally to their share of the vote.
Abstract: Politicians who care about the spoils of office may underprovide a public good because its benefits cannot be targeted to voters as easily as pork-barrel spending. We compare a winner-take-all system--where all the spoils go to the winner--to a proportional system--where the spoils of office are split among candidates proportionally to their share of the vote. In a winner-take-all system the public good is provided less often than in a proportional system when the public good is particularly desirable. We then consider the electoral college system and show that it is particularly subject to this inefficiency.
827 citations
29 Jul 1999
TL;DR: The notion of global public goods was introduced by Thomas Jefferson as discussed by the authors, who argued that knowledge is not only a public good but also a global or international public good, and that the international community has a collective responsibility for the creation and dissemination of one global public good -knowledge for development.
Abstract: Thomas Jefferson, the third President of the United States, described knowledge in the following way: “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.” In doing so, Jefferson anticipated the modern concept of a public good. Today, we recognize that knowledge is not only a public good, but a global or international public good. We have also come to recognize that knowledge is central to successful development. The international community, through institutions like the World Bank, has a collective responsibility for the creation and dissemination of one global public good -knowledge for development. The purpose of this paper is to review the concept of global public goods, to explain the sense in which knowledge is a public good, and to explore the implications for international public policy that derive from the fact that knowledge is a global public good. In particular, I shall emphasize the role of knowledge for development, articulated forcefully in this year’s World Development Report, 2 and the consequences that follow.
648 citations
TL;DR: In this paper, the authors compare the age-wealth distribution produced in life-cycle economies to the corresponding distribution in the US economy and find that the calibrated model economies with earnings and lifetime uncertainty can replicate measures of both aggregate wealth and transfer wealth.
614 citations