Development Policy As Public Finance

by Bell, Clive

• ISBN13: 9780198773672
• ISBN10: 0198773676
• Format: Paperback
• Copyright: 2003-10-30
• Publisher: Oxford University Press

Summary

This is a graduate text on the use of public economics in formulating development policy. How to raise and spend revenues in order to promote development in practice involves second-best considerations, which the analysis of the role of international trade, liberalization, and other economic reforms must take into account. Particular emphasis is placed on social cost-benefit analysis as a means to discipline public expenditure decisions. Summaries and exercises are included.

Author Biography

Clive Bell is Professor of Economics at Heidelberg University. Having obtained his D.Phil. from the University of Sussex in 1976, he has since held positions at the World Bank (1974-85), Johns Hopkins University (1985-6), Vanderbilt University (1986-95), and Regensburg University (1991-4).

Table of Contents

Introduction	1	(8)
1. International Trade: Theory	9	(29)
1.1. Received Theory	10	(13)
1.2. Market Failure	23	(6)
1.3. Policy-imposed Distortions	29	(2)
1.4. Public Finance	31	(2)
1.5. Summary	33	(1)
Recommended Reading	34	(1)
Exercises	34	(4)
2. International Trade: Practice	38	(28)
2.1. Protectionist Policies	39	(2)
2.2. A Measure of Protection	41	(4)
2.3. The Costs of Departures from First-best	45	(6)
2.4. Openness and Growth	51	(11)
2.5. Summary	62	(2)
Recommended Reading	64	(1)
Exercises	64	(2)
3. International Trade: Liberalization	66	(35)
3.1. Ranking Policies	67	(8)
3.2. Reductions in Tariffs When Wages are Rigid	75	(9)
3.3. A Relaxation of Quotas	84	(2)
3.4. Adjustment and Import Starvation	86	(3)
3.5. A Reduction in the Regulated Wage	89	(1)
3.6. Devaluation	90	(6)
3.7. Summary	96	(2)
Recommended Reading	98	(1)
Exercises	98	(3)
4. Taxation	101	(35)
4.1. Tax Instruments	102	(2)
4.2. The Level and Sources of Revenue	104	(3)
4.3. Optimal Taxation: Preliminaries	107	(7)
4.4. Optimal Commodity Taxation	114	(8)
4.5. The Diamond-Mirrlees Model	122	(4)
4.6. Effective Taxes: Pakistan, 1975/6	126	(5)
4.7. Summary	131	(1)
Recommended Reading	132	(1)
Exercises	132	(4)
5. Tax Reform	136	(27)
5.1. Quotas into Tariffs	137	(4)
5.2. Tariffs and Excises into a VAT	141	(4)
5.3. Reforming Commodity Taxes	145	(7)
5.4. The Inverse Optimum Problem	152	(2)
5.5. Intermediate Inputs	154	(4)
5.6. Summary	158	(1)
Recommended Reading	159	(1)
Exercises	160	(3)
6. Seigniorage and Debt	163	(24)
6.1. Seigniorage	165	(6)
6.2. Financing Deficits: Accounting	171	(2)
6.3. The Dynamics of Debt	173	(7)
6.4. Explosive Trends in Debt?	180	(3)
6.5. Summary	183	(2)
Recommended Reading	185	(1)
Exercises	185	(2)
7. Other Dynamic Pitfalls	187	(25)
7.1. Costly Reversals of Policy	189	(5)
7.2. Self-fulfilling Expectations and Crises	194	(7)
7.3. The Introduction of a VAT	201	(4)
7.4. Countermeasures	205	(1)
7.5. Investment	206	(3)
7.6. Summary	209	(2)
Recommended Reading	211	(1)
Exercises	211	(1)
8. An Introduction to Social Cost-Benefit Analysis	212	(25)
8.1. The Private Project	213	(2)
8.2. The Public Project and Social Profitability	215	(2)
8.3. Estimating Shadow Prices: A Partial Equilibrium Approach	217	(4)
8.4. The Shadow Prices of Tradables	221	(3)
8.5. The Limitations of a Partial Equilibrium Approach	224	(1)
8.6. 'Cookbook' Rules	225	(4)
8.7. Evaluating Private Projects	229	(1)
8.8. Summary	230	(1)
Recommended Reading	231	(1)
Exercises	232	(5)
9. Shadow Prices	237	(31)
9.1. The Principles of Shadow Prices	237	(2)
9.2. The Social Welfare Function	239	(3)
9.3. Shadow Prices in a Simple Model	242	(6)
9.4. Shadow Prices and Policies	248	(4)
9.5. A Regulated Wage	252	(6)
9.6. Tax Reform When There are Distortions in Production	258	(2)
9.7. Shadow Prices and Tax Reform	260	(2)
9.8. Summary	262	(2)
Recommended Reading	264	(1)
Exercises	264	(4)
10. Time: The Social Discount Rate	268	(27)
10.1. Defining the Social Discount Rate	269	(1)
10.2. Estimating the Social Discount Rate	270	(7)
10.3. The Consumption Rate of Interest	277	(2)
10.4. A Simple Inter-temporal Model	279	(7)
10.5. The Premium on Government Income	286	(3)
10.6. The Inter-temporal Structure of Shadow Prices	289	(1)
10.7. Summary	289	(2)
Recommended Reading	291	(1)
Exercises	291	(4)
11. Space: Transportation Costs	295	(23)
11.1. The Model	296	(9)
11.2. Shadow Prices	305	(7)
11.3. Transportation Projects	312	(1)
11.4. Summary	313	(2)
Recommended Reading	315	(1)
Exercises	315	(3)
12. Risk and Uncertainty	318	(20)
12.1. The Risk Profile of a Project	318	(4)
12.2. Shadow Prices Under Risk	322	(1)
12.3. A Decision Rule	323	(5)
12.4. Some Reservations	328	(5)
12.5. Summary	333	(2)
Recommended Reading	335	(1)
Exercises	335	(3)
13. Large Projects	338	(37)
13.1. The Approach	339	(6)
13.2. The Social Profitability of a Large Project	345	(5)
13.3. An Example: A Bridge	350	(4)
13.4. Congestion and Tolls	354	(4)
13.5. Changes in Factor Prices: An Irrigation Project	358	(8)
13.6. Evaluating Muda	366	(3)
13.7. Summary	369	(2)
Recommended Reading	371	(1)
Exercises	371	(4)
14. Land Reform and Tenancy	375	(40)
14.1. Property Rights in Land	376	(4)
14.2. Redistributing Private Holdings	380	(8)
14.3. The 'Market' Solution	388	(2)
14.4. Land Reform as a 'Large' Project	390	(7)
14.5. Tenancy	397	(6)
14.6. The Political Economy of Land Reform in Historical Perspective	403	(5)
14.7. The Prospects for Reformism	408	(4)
14.8. Summary	412	(1)
Recommended Reading	413	(1)
Exercises	413	(2)
15. Small-Scale Credit	415	(32)
15.1. The Demand for Credit	416	(6)
15.2. Lenders' Costs	422	(4)
15.3. Evaluating a Credit Programme	426	(2)
15.4. Competition Between Formal and Informal Lenders	428	(6)
15.5. Reforming Public Policy	434	(10)
15.6. Summary	444	(1)
Recommended Reading	445	(1)
Exercises	445	(2)
Appendix. A Primer in Duality Theory	447	(14)
A.1. Technology	447	(2)
A.2. The Profit Function	449	(2)
A.3. The Cost Function	451	(2)
A.4. The Envelope Theorem	453	(3)
A.5. The Revenue or GNP Function	456	(2)
A.6. The Indirect Utility Function	458	(1)
A.7. The Expenditure Function	459	(2)
References	461	(10)
Index	471