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A Handbook of Alternative Theories of Public Economics

Edited by Francesco Forte, Emeritus Professor of Public Economics, Department of Economics and Law, Sapienza – University of Rome, Italy, Ram Mudambi, Professor and Perelman Senior Research Fellow of Strategic Management, Department of Strategic Management, Fox School of Business, Temple University, US and Pietro Maria Navarra, Professor of Economics of the Public Sector and Chancellor, University of Messina, Italy and Visiting Professor of Economics and Philosophy at the University of Pennsylvania, US
This comprehensive and thought-provoking Handbook reviews public sector economics from pluralist perspectives that either complement or reach beyond mainstream views. The book takes a comprehensive interdisciplinary approach, drawing on economic elements in the fields of philosophy, sociology, psychology, history and law.
Extent: 576 pp
Hardback Price: $255.00 Web: $229.50
Publication Date: 2014
ISBN: 978 1 78100 470 8
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Paperback Price: $65.00 Web: $52.00
Publication Date: 2015
ISBN: 978 1 78347 282 6
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  • Economics and Finance
  • Austrian Economics
  • History of Economic Thought
  • Public Choice Theory
  • Public Finance
  • Public Sector Economics
  • Politics and Public Policy
  • Public Choice
This comprehensive and thought-provoking Handbook reviews public sector economics from pluralist perspectives that either complement or reach beyond mainstream views.

The book takes a comprehensive interdisciplinary approach, drawing on economic elements in the fields of philosophy, sociology, psychology, history and law. The expert contributors present new methodological approaches across these disciplines in five distinct sections:

• ‘Revisiting the Theoretical Foundations’ compares and contrasts Austrians, Marxists, public choice theorists and Keynesians
• ‘Revisiting the Values’ is concerned with justice, welfare, religions and civil rights
• ‘Beyond Rationalistic Rational Choice’ includes chapters devoted to memory, information and group motivation
• The final sections on ‘Optimal Government and Government Failure’ and ‘Public Economics of Public Bads’ deal with competition among governments, their suboptimal size, regulation, corruption, the informal economy, cognitive dissonance, rent seeking, the UN and criminal cycles.

Academics, researchers and students with an interest in economics – particularly public sector economics and Austrian economics – and public policy will find this Handbook to be an invaluable reference tool.
'A Handbook of Alternative Theories of Public Economics edited by Francesco Forte with co-editors seeks to rejuvenate public economics by examining the relevance of schools of economics which compete with the current mainstream. The approaches of public choice, Austrian, Marxian, supply side economics, and new institutional schools are contrasted to the neo-Keynesians and the new political economics. The Handbook highlights features of these schools and points out their long neglected importance in understanding the political economy of the public sector. The Handbook is an insightful, unconventional and imaginative book well worth reading by public choice experts, public sector analysts and practitioners.'
– Gordon Tullock, formerly of George Mason University School of Law, US

‘A Handbook of Alternative Theories of Public Economics is especially welcome because it gathers studies on the problems of public economics from widely different angles. Long gone is the time when it was enough to study Musgrave to be up to date in the economics of government and social welfare. The field is now hotly disputed, so that this Handbook will prove informative about parts of the literature of which the specialist may be unaware. Prof. Forte, the principal editor, is co-author of four empirical studies on questions of the size, the finance and some particular effects of government. One of these is within a section on "Public bads" that includes articles on corruption and the informal economy not usually found in texts on public economics. There are essays extending the research programme of the Austrian School on the State to cycle theory and the euro. No less interesting are the articles on government failure. For me the collection has proved especially interesting for the number of essays on justice, fairness, utility and rationality: it is very convenient to have the different approaches to these contentious questions treated with no attempt to paper over the cracks.’
– Pedro Schwartz, San Pablo University, Madrid, Spain

‘Economics has a very strong paradigm, grounded in rational choice behavior and concepts of equilibrium in markets. But it has its weaknesses. These were never more apparent than in recent years after the failure to predict, or even understand the financial crisis of 2007-8 and the subsequent crisis of the euro. Exactly what these weaknesses are is of course the subject of much debate. But the crisis and the associated failures of the dominant paradigm have had at least one salutary side effect, of providing room for other ways of thinking to come forward and to be heard. This volume focuses on alternative approaches to public economics. It surveys a number of alternative approaches, and also provides some unusual perspectives. It includes contributions by well known economists such as Giorgio Brosio and Pierre Salmon, and a chapter by Coco and Fedeli employing a Marxian economic approach to public economics. Some of the chapters are very novel, including two chapters on cognitive dissonance and one on the role of memory in modeling cycles of extreme events. There are also chapters on Austrian economics. And there is a welcome discussion of economic approaches to religion and values, including a chapter on religion by the distinguished economist Dennis Mueller, and contributions on the role of values and ethics in politics and public economics. All in all, the book provides a most welcome sourcebook of new and sometimes very different ways of thinking about public economics.’
– Ronald Wintrobe, Western University, Canada
Contributors: F. Acacia, J. Alm, G. Brady, G. Brosio, M. Caputo, M. Casson, G. Coco, M. Cubel Sanchez, S. Fedeli, M. Florio, F. Forte, N. Goldschmit, A. Habisch, M. Holler, J. Huerta de Soto, J.P. Jimenez, A. Koziashvili, M.A. Leroch, C. Magazzino, M. Mantovani, D. Montolio, R. Mudami, D.C. Mueller, S. Nitzan, D.M.A. Patti, P. Salin, P. Salmon, F. Sobbrio, V. Tanzi, Y. Tobol, B.A. Wickström, R. Zanola
Contents:

PART I: REVISITING THE THEORETICAL FOUNDATIONS
1. The Neglected Importance of the Austrian Thought in Public Economics
Pascal Salin

2. In Defense of the Euro: An Austrian Perspective
Jesús Huerta de Soto

3. Marxian Public Economics. With a Comment by Massimo Florio
Giuseppe Coco and Silvia Fedeli

4. The Laffer Curve Muddle
Vito Tanzi

5. Deficits, Tax Burden and Unemployment
Silvia Fedeli and Francesco Forte

PART II: REVISITING THE VALUES
6. Theories of Justice and Empirical Results
Manfred Holler and Martin Leroch

7. Strategic Voting and Happiness
Francesca Acacia and Maria Cubel Sanchez

8. Religious Parties
Dennis C. Müller

9. Western Religion, Social Ethics and Public Economics
Nils Goldschmit and Andre Habisch

10. Indigenes, Immigration, and Integration: A Welfare-Economics Approach to Minority Rights
Bengt Arne Wickstrom

PART III: BEYOND RATIONALISTIC RATIONAL CHOICE
11. The Role of Memory in Modeling Social and Economic Cycles of Extreme Events
Michele Caputo

12. Expanding the Theory of Tax Compliance from Individual to Group Motivations
James Alm

13. The Political Economy of News Media: Theory, Evidence and Open Issues
Francesco Sobbrio

PART IV: OPTIMAL GOVERNMENT AND GOVERNMENT FAILURE
14. How Significant is Yardstick Competition among Governments? Three Reasons to Dig Deeper
Pierre Salmon

15. Optimal Size of Government and Optimal Ratio between Current and Capital Expenditure
Francesco Forte and Cosimo Magazzino

16. Government Failures in Railway Public Policy. The British Case
Mark Casson

17. Cognitive Dissonance, Iron Triangle and Rent seeking. Sequester and the Fiscal Cliff
Gordon Brady

18. Cognitive Dissonance, Efficient and Inefficient Rent Seeking. Public Aid to the Movies
Francesco Forte and Michela Mantovani

PART V: PUBLIC ECONOMICS OF PUBLIC BADS
19. Bargaining in International Conflicts Resolution: UN Involvement and Conflict Settlement
Dario Maimone Ansaldo Patti and Daniel Montolio

20. The Norm of Profits Extraction from Corruption by Bureaucracy and Market Size
Arkadi Koziashvili, Shmuel Nitzan and Jossef Tobol

21. Alternative Views on the Origins and Impact of the Informal Economy
Giorgio Brosio, Juan Pablo Jimenez and Roberto Zanola

22. Long-run and Shorter-run Criminal Cycles in the Economics of Public Bads
Michele Caputo, Francesco Forte and Michela Mantovani