1. Public Sector Economics

    Study Questions For The Fourth Exam

     

    These questions are not designed to take the place of studying your notes and the reading assignments.  Do not e-mail me and ask me to answer all or some of these questions for you.  If you have missed class, it is your responsibility to get the notes from another student.  Once you have answered these questions yourself, if you are unsure of any of your answers, let me know and I will tell you if you are correct or not.  Don't be afraid to ask me questions, I just want you to try to answer the questions yourself first.  Make sure you have done all of the reading assigned.  Also, pay attention to the homework questions and the exercises we have done in class when studying.

     

     

Topic:  Public Choice:  Voting Rules, Etc.

 

            1. With respect to majority voting - how and when will vote trading among voters increase efficiency?  How and when will it not increase efficiency?  How is efficiency defined in this analysis?  Criticize this.

            2. With respect to majority voting with exhausted voting - explain Condorcet's voting paradox?  What causes it?  What are its implications?

            3. How is a median voter defined? 

            4. According to Randy Holcombe, when should the median voter model be doubted (not realistic) and when does it have merit (more realistic)?

            5. What does the median voter model predict (basically speaking)?  Graphically represent the theory with respect to political ideologies.  Would it be considered "efficient" from the mainstream view?  When would it be?  When wouldn't it be?

            6. Using the median voter model -- graph the full electorate when there is political consensus.  What will politicians tend to do if they believe this to be true?

            7. Using the median voter model -- graph the full electorate with polarized politics.  What results could occur in this case?  What will politicians tend to do if they believe this to be true?

            8. Criticize the median voter model.

 

Topic:  Public Choice Cont. - Some More Insights

  1. 1. What is logrolling?  What is the difference between explicit and implicit logrolling? What is a tie-bar?

  2. 2. Why does logrolling occur?

  3. 3. Can logrolling be socially beneficial?  Explain.

  4. 4. Can logrolling be socially harmful?  Explain.

  5. 5. Buchanan and Tullock talk about logrolling being immoral -- what is their argument?

  6. 6. What institutional changes might decrease logrolling?  Explain.

  7. 7. What does it mean when economists say politicians are vote seekers?

  8. 8. Why are most political battles likely to take place over proposals that are of primary interest to small groups?

  9. 9. Following from the median voter model, what strategy could a politician take if he or she were in agreement on some issues with their opponent?

  10. 10. Why does lobbying by special interests and logrolling lead to inefficient transfers of income?  Or, if income were going to be transferred -- why is lobbying not an "efficient" way of doing it (in comparison)?

  11. 11. What is Mancur Olson's theory of groups?  How does it relate to special interest groups?

  12. 12. If getting rid of special interest legislation would increase the benefit of everyone in society, why wouldn't any one voter agree to get rid of his or her special interest?

  13. 13. What is Niskanen's theory of bureaucracy and government growth?

  14. 14. Niskanan's theory includes the idea that bureaucracies are hard to monitor - explain the reasons why.

  15. 15. What are the conclusions Niskanan's model makes?

  16. 16. What are some theories regarding the inefficiency of government bureaus and some possible answers to them?

  17. 17. What are some problems with Niskanan's model?

Topic:  The Size and Growth of Government - Measurement and Theory

  1. 1. What has the overall trend been with respect to the size of government expenditures relative to GDP in the U.S. at both the federal and local levels?

  2. 2. What is the difference between the Citizen-Over-State and State-Over-Citizen theories of why government grows?

  3. 3. How might the median voter model explain the growth of government? 

  4. 4. What is the price elasticity of demand for government?  What does it mean?  What does it mean if it is inelastic?

  5. 5. Why might lower income voters vote for a bigger government?  What is the theory (and assumptions)?

  6. 6. What is the "social affinity" model as to why government grows?

  7. 7. Pelzman argues that the government grows because political candidates offer voters transfer payments.  Explain his theory.

  8. 8. As we have already discussed, according to Olson, interest groups lead to policies being passed that benefit a few at the expense of the many -- explain.  How does this relate to a larger government?

  9. 9. What is the causality issue with interest groups?

  10. 10. What is Niskanen's theory of bureaucracy and government growth?

  11. 11. What is Buchanan's fiscal illusion and why does government grow because of it?

  12. 12. What is the difference between a direct and indirect tax?

  13. 13. What are some hypotheses that follow from fiscal illusion?

  14. 14. What is Tullock's theory regarding bundling and the growth of government? 

  15. 15. How does logrolling increase the size of government?

  16. 16. What is the Brennen and Buchanan leviathan theory of government growth and what is their solution?

MAKE SURE YOU GO OVER THE HOMEWORK, IN CLASS EXERCISES AND READING.