what is the reason for the growing overnment secotr?
Economic development requires more and more government services
Urbanization
environmental policies
social protection
name the hyppthesis behind the coase theorem:
Efficiency Hypothesis: clear definition of property
rights
Irrelevance Hypothesis: in the absence of transaction cost
Relevance: Theorem inspired introduction of CO2-trading schemes.
name the First Theorem of Welfare Economics
First Theorem of Welfare Economics: In the case of well-defined property rights a general competitive equilibrium is a Pareto optimum.
Optimal allocation of consumption: MRS identical across individuals
Optimal allocation of production factors
Optimal production structure: MRS = MRT
price ratio
nenne Dinge, die im 1. welfare theorem nicht auftreten dürfen:
market power
economies of scale
public goods
externalities
asymmetric information.
name 3 reasons for monopolies:
natural monopoly
collusion (cartel)
patents
what is a positive or negative externality?
Definition:
A positive externality: if third parties do not have to pay for the cost of a benefit that goes with the action (as there is no connection of the third parties to the agent via markets).
Likewise, a negative externality exists if costs that accrue to third parties because of some action do not have to be compensated by the agent.
what is grandfathering?
Firmsgetfreecertificates(“grandfathering“). Firms receive rent from using the environment.
what is a direct tax?
Direct Taxes
Falls on legal or natural person and may condition on special characteristics of the tax payer (Expl.: income tax, corporate income tax)
what is a indirect tax?
Indirect Taxes
Based on sales or transactions No consideration of personal characteristics. Expl: VAT, excises
Assumption of tax shifting
what is seperate filing? and whats the proplem?
Separate filing may lead to situations where couples with the same income pay different amounts of taxes. With a nonlinear function, separate filing is a problem for comparison 2.
Strategies to reduce or avoid the excess burden
Lump sum tax (Kopfsteuer) But politically difficult.
Tax on individual „ability“ But empirically difficult to observe.
Excess Burden is a quadratic function of the tax rateàLow marginal tax rates tend to be better, tax-cut-cum-base-broadening.
what is explicit dept?
Explicit debt
Securitized public debt at the federal level, e.g.
Non-interest bearing Treasury bonds (unverzinsliche Schatzanweisungen
what is implicit dept?
implicit dept:
Governments make promises for future benefits that have to be financed by future taxes, i.e. there are no (or insufficient) savings or provisions today.
– Public pensions
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