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.

Chapter 1: Public Finance and the Three Branch Model

Richard A. Musgrave

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


1 Public finance and the three branch model Richard A. Musgrave Professor Ott has invited me to join her in this volume and I am happy to contribute this note. I will take this opportunity to reopen that treasure box of ideas that have shaped the development of ‘public finance’ and my vision of what the field should be about. Seen against this background, I then take a retrospective look at my three branch model and some of the problems that it poses, problems also related to the theme of this volume. 1 Unpacking the treasure chest My fascination with public finance dates back to 1930, my first year of university study at Munich. This was followed by two years at Heidelberg, where, to my good fortune, Alfred Weber’s Institut für Sozialwissenschaft was engaged in a lively debate over how the field of public finance should be structured and how its role should be defined. On one side, there was the tradition of Wagner and Stein, leaders of Germany’s Historical School in the 1880s and 1890s, with central focus on the role of the state as chooser and provider of public goods – a framework distinct from that of market economics. On the other, there was the Austrian School of that period, linking the efficient provision of public goods to consumer preference. A first step was thus taken to join public and market economics in a common framework. But as Wicksell (1886) soon noted, this left a major...

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