Finance College Core Curriculum Series Textbooks for the Finance Major

Author: Guo Qingwang
Publisher:
Publication Date: 2002-07-01
Features: After three years of effort, we have finally completed the writing of this Public Finance. Although we had long planned to write a textbook on public finance and had been continuously thinking and accumulating relevant content over the past decade, putting it into practice still felt like a challenging task. Despite our many reflections during the writing process, we did not want to write a lengthy preface but rather provide an overview of the book's chapter structure and main features. One of the main economic phenomena of the 20th century was the rapid expansion of government departments: in developed economies, government departments became strong economic entities; in developing economies, the share of economic resources mobilized by government departments was steadily increasing. The economic theory analysis of government functions primarily focuses on four aspects: (1) examining the trend of increasing government size and its control; (2) analyzing the impact of government financing methods on social welfare; (3) exploring the effects of government revenue and expenditure activities on private economic activities and social resource allocation; (4) studying fiscal and monetary policies to achieve economic stability and growth. The theoretical analysis centered around these issues constitutes the main content of public finance. This book is divided into four parts. Part I (Chapters 1 and 2) primarily clarifies the role of the government in a market economy, with the core issue being the fiscal functions under market economy conditions. Part II (Chapters 3 to 7) provides a theoretical framework for analyzing fiscal expenditures, and, explores aspects such as the scale, structure, efficiency, and economic impact of fiscal expenditures. Part III (Chapters 8 to 13) studies the basic theories of taxation, including tax principles, tax shifting and incidence, and tax effects, while also conducting theoretical discussions on tax system construction, particularly tax reforms. Part IV (Chapters 14 to 16) comprehensively examines some theoretical issues related to fiscal revenues and expenditures, including fiscal imbalances, fiscal deficits, public debt, and fiscal policy. Since this book is designed for undergraduate students majoring in public finance, the content selected emphasizes theoretical depth and cutting-edge perspectives. Some topics are not covered in this book, such as the fiscal relationship between central and local governments, which we plan to address as a key focus in the upcoming Public Economics textbook for the 21st Century Curriculum Textbooks—Public Administration Course Textbooks for Higher Education.
The features of this book are as follows:
First, the book primarily adopts the method of welfare economics. Currently, there are two main approaches to writing public finance internationally: one based on welfare economics and the other based on public choice theory, the latter having become popular only in the past decade. Popular textbooks on public finance written based on welfare economics include Musgrave's Public Finance Principles (1959), Tricker's Public Finance Theory (1981),'s Public Economics (1979), Stiglitz's Public Sector Economics (1986), and Rosen's Public Finance (revised multiple times since 1985). Textbooks on public finance written based on public choice theory mainly include Jackson's Public Economics (1990),'s Public Economics (1979), and et al.'s Public Finance and Public Choice (1998). This book still primarily adopts the method of welfare economics, using public choice theory to explain specific issues in some cases.
Second, the book follows the sequence of expenditure → revenue → balance → policy. After Musgrave's Public Finance Principles was published and until the early 1970s, fiscal policy occupied a significant portion of public finance textbooks. However, due to the development of macroeconomics, to avoid repetition with macroeconomic content, fiscal policy was rarely discussed in subsequent public finance textbooks. This book also touches on some major issues of fiscal policy, but only from the perspective that fiscal imbalances are a common phenomenon → fiscal imbalances are mostly manifested as fiscal deficits → the existence of fiscal deficits is often the result of government consciously implementing fiscal policies. As for fiscal management, since there are specialized courses on budgets, fiscal management, or tax management, and it also exceeds the scope of public finance as an economics course, the content on management is not extensively covered.
Third, the book focuses on economic analysis with supplementary descriptive content, avoiding prescriptive or advisory analysis. In our view, as a textbook, it is best to discuss universal, regular, and long-term concepts, primarily explaining what and why, leaving the solutions to real-world problems to decision-makers rather than general textbooks.
Fourth, as a foundational course, public finance emphasizes the introduction and analysis of basic knowledge, theories, and methods. Therefore, this book strictly adheres to these three requirements, leaving some basic skills, operational methods, and institutional descriptions to be covered in related courses.
Fifth, the book strives to integrate new data, new methods, new perspectives, and new developments in its writing.
Sixth, in the review and reflection questions at the end of each chapter, some review the chapter content, while others require students to analyze and think about real-world issues and their solutions based on the chapter material.
Seventh, the book includes statistical tables and a large number of references at the end to facilitate readers interested in related issues to conduct further research and analysis using the provided data.