Table of Contents

The Elgar Companion to Public Economics

The Elgar Companion to Public Economics

Empirical Public Economics

Elgar original reference

Edited by Attiat F. Ott and Richard J. Cebula

Attiat Ott and Richard Cebula have recognised the need to present, in an accessible and straightforward way, the voluminous literature in the public economics arena. Advances in econometric techniques and the spillover of knowledge from other disciplines made it difficult, not only for students but also for lecturers, to accurately find the information they need.

Introduction and Background

Attiat F. Ott and Richard J. Cebula

Subjects: economics and finance, public choice theory, public sector economics, politics and public policy, public choice


Attiat F. Ott and Richard J. Cebula The link between theoretical and empirical public economics The special nature of the fiscal economy is determined by its function, which is to provide the state, as the highest form of compulsory collective economy, with the requisite income (goods or money) and to implement its use. The specific character of both the consumption and the income sides of the fiscal economy arises necessarily from this fact. This is of primary importance for a grasp of the science of Public Finance (Wagner, 1883, p. 2). In 1883, Adolf Wagner identified the public economy in terms of its function and need of private resources to fulfill this function. More than a century later (122 years), the study of public finance revolves around the identification of which function is to be performed by the public economy and which should be left in private hands, and those sources of income necessary for it to be implemented. Wagner’s framework at first glance appears to be theoretical. In reality it offered the first ‘empirical’ content to a theory of public finance. One and all have heard of Wagner’s ‘Law of increasing state activities’, an empirical observation that over the years has drawn students of public finance to engage in a wide range of empirical analyses ranging from a single equation ordinary least squares (OLS) regression to very sophisticated econometrics. Wagner states quite categorically that his ‘law’ is an ‘empirically observed uniformity’ by which, as the...