The Foundations of Economic Policy
Values and Techniques

A user-friendly reinterpretation of market failure, using a wide range of modern techniques and perspectives.

Nicola Acocella (Author), Brendan Jones (Translated by)

9780521586382, Cambridge University Press

Paperback, published 1 October 1998

540 pages, 29 tables
24.4 x 17 x 2.8 cm, 0.85 kg

'Professor Nicola Acocella has provided an illuminating and challenging account of the foundations of economic policy. His analysis covers the established ground as well as providing new departures, the book is a rich addition to the existing literature.' Amartya Sen, Trinity College, Cambridge

Recent developments in public economics have largely been in the direction of reaffirming the limits of the market and of establishing new ones. The possible existence of fundamental non-convexities, imperfect and asymmetric information, incentive compatibility, imperfect competition, strategic complementarity, and scale economies led to the conclusion that a large set of market failures exist; such situations also imply government failure. Acocella, considers this complicated picture and provides a discussion of the different approaches to establishing social 'rankings' of the possible situations and the underlying principles. The arguments for and against different institutions are then analysed at a micro and macroeconomic level. The market and the government are recognised as imperfect, and thus complementary, institutions. Specific policy targets and instruments are considered in the areas of micro and macro-economic policy. Special attention is devoted to questions of policy management in an open economy. Finally, problems of domestic and international policy co-ordination are considered.

1. Introduction
Part I. Defining Social Preferences: 2. Individual preferences and social preferences
3. The Pareto principle and 'new welfare economics'
Part II. Social Choices, Government and the Market: 4. Theories of justice, welfare functions and the social optimum
5. Social preferences and institutions
6. Market failures: microeconomic aspects
7. Market failures: macroeconomic aspects
Part III. Normative and Positive Theory of Economic Policy: 8. The normative theory of economic policy
9. 'Non-market' failures: elements of a positive theory of economic policy
Part IV. Microeconomic Intervention: 10. Microeconomic policies for efficiency
11. Redistributive policies and optimal taxation
12. Social choice and cost-benefit analysis
Part V. Macroeconomic Intervention in a Closed Economy: 13. Macroeconomic objectives and monetary policy
14. Macroeconomic objectives and fiscal policy
15. Incomes and price policies
Part VI. Macroeconomic Intervention in an Open Economy: 16. Monetary systems and exchange rate regimes
17. Balance of payments policies
18. Economic policies in an open economy
Part VII. Problems of 'Regime' in Government Action, Domestic and International: 19. Consistency in public choice
Index
References.

Subject Areas: Economic theory & philosophy [KCA]