Empirical Public Economics
Elgar original reference
Edited by Attiat F. Ott and Richard J. Cebula
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...