财政学哈维罗森第七版课后习题答案英文全.docx

财政学哈维罗森第七版课后习题答案英文全.docx

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财政学哈维罗森第七版课后习题答案英文全

Instructor’sManualtoaccompany

PublicFinance,SeventhEdition,byHarveyS.Rosen

SuggestedAnswerstoEnd-of-ChapterDiscussionQuestions

Someofthequestionshavenosingle“correct”answer–reasonablepeoplecangooffindifferentdirections.Insuchcases,theanswersprovidedheresketchonlyafewpossibilities.

Chapter1-Introduction

1.a.Putin’sstatementisconsistentwithanorganicconceptionofgovernment.Individualsandtheirgoalsarelessimportantthanthestate.

b.Rehnquistmakesaclearstatementofthemechanisticviewofthestate.

2.a.Apersonwithanorganicconceptionofthestatemightreactfavorably,arguingthatevenifanindividualownerisworseoffbecausehemustshowonlyFrenchmovies,thenationisbetteroffbecauseitachievesmoreunity.

b.Alibertarianwouldcertainlyrejectthispolicyandthereasoningbehindit--thereisno“nationalinterest”independentoftheinterestsofindividuals,andpeopleshouldhavetherighttoruntheirlivesinthewaythattheyprefer--includingseeingwhatevermoviestheywant.

c.Asocialdemocratwouldtrytobalancethesetwoaims,anditishardtopredicthowheorshewouldcomeout.

3.Themechanisticviewofgovernmentsaysthatthegovernmentisacontrivancecreatedbyindividualstobetterachievetheirindividualgoals.Withinthemechanistictradition,peoplecoulddisagreeontheobesitytax.Libertarianswouldsaythatpeoplecandecidewhatisbestforthemselves-whethertoconsumehighcaloriefood-anddonotneedproddingfromthegovernment.Incontrast,socialdemocratsmightarguethatpeoplearetooshortsightedtoknowwhatisgoodforthem,sothatgovernment-providedinducementsareappropriate.

4.a.Ifthesizeofgovernmentismeasuredbydirectexpenditures,themandatedoesnotdirectlyincreaseit.Costsofcompliance,however,maybehighandwouldappearasanincreaseina“regulatorybudget.”

b.It’shardtosaywhetherthisrepresentsanincreaseordecreaseinthesizeofgovernment.OnepossibilityisthatGDPstayedthesame,andgovernmentpurchasesofgoodsandservicesfell.Anotheristhatgovernmentpurchasesofgoodsandservicesgrew,butataslowerratethantheGDP.Onemustalsoconsidercoincidentfederalcreditandregulatoryactivitiesandstateandlocalbudgets.

c.Thefederalbudgetwoulddecreaseifgrants-in-aidwerereduced.However,ifstateandlocalgovernmentsoffsetthisbyincreasingtaxes,thesizeofthegovernmentsectorasawholewouldnotgodownasmuchasonewouldhaveguessed.

5.Theinflationerodestherealvalueofthedebtby0.021x£311billionor£6.5billion.Thefactthatinflationreducestherealdebtobligationmeansthatthisfigureshouldbeincludedasrevenuetothegovernment.

6.Thefederalgovernmentgrewby$450billion.However,becausethepricelevelwentupby16percent,intermsof2001dollarsthisamountedtoarealincreaseof$224billion（=$1.86trillion-1.16*$1.41trillion=$1.86trillion-$1.64trillion）.Notethattheincreaseinpricesof16percentintheRosentext（p.18）differsfromofficialsources.Accordingtothe2004EconomicReportofthePresident（TableB-60）,theCPI-Uwas177.1in2001andwas144.5in1993,anincreaseof22.5percent,not16percent.Ifoneusesthesenumbers,governmentspendingincreasedinconstant2001dollarsfrom$1.72trillionin1993to$1.86trillion,or$140billion.AsaproportionofGDP,federalspendingin1993was21.2percentandin2001itwas18.2percent.Hence,byonemeasure,thesizeofgovernmentfellandbytheothermeasure,itgrew.Togetamorecompleteanswer,onewouldwantdataonthepopulation（tocomputerealspendingpercapita）.Also,itwouldbeusefultoaddinexpendituresbystateandlocalgovernments,toseeifthetotalsizeofgovernmentfell.Also,althoughitwouldbehardertomeasure,onewouldwanttotrytogainsomesenseofhowtheregulatoryburdenontheeconomygrewduringthistimeperiod.

Chapter2–ToolsofPositiveAnalysis

1.Therealitythatastronomersaretryingtounderstandisnotinfluencedbyany“policies”thatastronomersmightimplement.Thatis,planetsandstarsdoactanydifferentlywhentheyarebeinganalyzed,whereaspeoplecanchangetheirbehavior.Moreover,theparameterswithwhichastronomersmustdealareconstantovertime（atleastinthe“short-run”ofhundredsofyears）,whiletheparametersineconomicscanquicklychangeovertimeandacrossgeography.

2.Achangeinthemarginaltaxratechangestheindividual’snetwage.Thisgeneratesbothanincomeeffectandasubstitutioneffect.Aslongasleisureisanormalgood,theseeffectsworkinoppositedirections.Hence,onecannottellaprioriwhetherlaborsupplyincreasesordecreases.Onecouldasktaxpayerstodescribehowtheywouldchangetheirbehaviorundertheproposal,butitishardtoimaginethatthiswouldyieldusefulresults.Inasocialexperiment,acontrolgroupwouldconfrontthestatusquo,andanexperimentalgroupwouldfacethenewtaxregime.Thisisclearlyinfeasible.Econometricinvestigationoflaborsupplyseemsthebestapproach,particularlyifdataassociatedwithpastchangesintaxratescanbebroughttobearontheproblem.

3.Generally,economicoutcomesareaffectedbyanumberofvariablessomeofwhichareobservedandothersofwhichareunobserved.Economistsoftencannotperformcontrolled,randomizedexperiments,whichmakesitdifficulttoassesshowanysinglevariableaffectsagivenoutcome.Moreover,eveninthecaseswhenexperimentsarerun（e.g.,theNegativeIncomeTaxexperimentortheRANDHealthInsuranceExperiment）,anumberofunintendedbehaviorscanarisebecausepeopleknowtheyareintheexperimentforashortamountoftimeandbecauseoflackofgeneralizability.Inthemedicalexamplehere,brainimpairmentmaybeduetoanumberoffactorsthatareeitherobservedareunobserved.Ecstasyusersclearlyarenotarandomsampleofthepopulation,butarelikelytodifferintermsoftheirattitudestowardsrisk,theirdiscountrates,andpotentiallymanyotherways.Hence,onecannotdefinitivelyconcludewhetherbrainimpairmentisduetoEcstasyorsomevariablethatiscorrelatedwithEcstasyuse.Therearenumerousnon-experimentalmethodsthatmaybehelpfulininferringthecausaleffectofEcstasy.Forexample,iftherewereaplausible“instrumentalvariable”（perhapsthepunitivenessofthedruglawsinastate）thatwascorrelatedwiththesupplyofEcstasybutnototherwisecorrelatedwiththeoutcomesofinterest,onemaybeabletoestimatethecausaleffectofEcstasyonlong-rundevelopmentalproblems.

4.Thetextpointsoutthepitfallsofsocialexperiments:

theproblemofobtainingarandomsampleandtheproblemsofextendingresultsbeyondthescopeoftheexperiment.Participantsinthestudyhadfoundittotheiradvantagetobeapartoftheexperiment,whichmayhaveresultedinaself-selectedpopulationunrepresentativeofthewidergroupofhealthcareconsumers.Inaddition,theRANDHealthInsuranceExperimentwasoflimitedduration,afterwhichtheparticipantswouldmovetosomeotherhealthplan.Thisdesigncouldinducecertainbehaviorintheshort-runthatwouldnotnecessarilybepresentifthehealthinsurancecoveragewerepermanentratherthantransitory.Further,physicians’“standardpractices”arelargelydeterminedbythecircumstancesofthepopulationasawhole,nottherelativelysmallexperimentalgroup.

5.First,itisimportanttonotethatthenumbersonpage 32ofRosen’stextactuallyshowthesurplus,notthedeficit.Thatis,thenegativesurplusof$221.2in1990isactuallyadeficit,whilethepositivesurplusof$236.4isasurplus.Thereisaveryweak,negativerelationshipbetweensurplusesandinterestrates（thecorrelationcoefficientis-.043）,orputdifferently,aweak,positiverelationshipbetweendeficitsandinterestrates.Howeveritisexpressed,itisweak--by“eyeballing”thedata,itmightappearthatlargerdeficitsleadtolowerinterestrates（forexample,bycomparingthedatafrom1980withthedatafrom2000）.Oneclearlywouldneedmoredatatoinvestigatethisquestion.Onewouldwanttolookatdeficitsrelativetosomebenchmark,suchasGDP.Onewouldwanttoexpressbothinterestratesanddeficitsinrealterms,ratherthannominalterms.Onewouldliketocontrolforotherfactorsthatcanaffectinterestrates,suchasmonetarypolicyandthelevelofeconomicactivity.Finally,onewouldwanttodeterminewhichwaythecausalityruns–dolargerdeficitscausehigherinterestrates,ordohigherinterestratescauselargerdeficits（since,byconstruction,oneofthelargestitemsinthefederalbudgetisinterestonthedebt）.

Chapter4–PublicGoods

1.a.Wildernessareaisanimpurepublicgood–atsomepoint,consumptionbecomesnonrival;itis,however,nonexcludable.

b.Waterfromamunicipalwatersupplyisbothrivalinconsumptionandexcludable.Myconsumptionofwaterprecludesyoufromconsumingthesamewater,thusitisrival.Themunicipalitycancontrolwhoconsumeswaterbyshuttingofftheflowtocustomers,thusitisexcludable.Thisisausefulquestionforshowingthatnotallpubliclyownedfacilitiesarepublicgoods.

c.Medicalschooleducationisaprivategood.

d.Televisionsignalsarenonrivalinconsumption.

e.AnInternetsiteisnonrivalinconsumption（althoughitisexcludable）.

2.WeassumethatCheetah’sutilitydoesnotenterthesocialwelfarefunction;hence,herallocationoflaborsupplyacrossactivitiesdoesnotmatter.

a.Thepublicgoodispatrol;theprivategoodisfruit.

b.RecallthatefficiencyrequiresMRSTARZAN+MRSJANE=MRT.MRSTARZAN=MRSJANE=2.ButMRT=3.Therefor