Public Economics

Public economics provides a framework for thinking about the planner’s or the government’s intervention to the market. To this end, microeconomic models are used to assess how various market failures, inefficiencies, and inequalities can be corrected.

Much of modern public economics is related to inequality. The market economy does not necessarily produce a socially desirable distribution of income, and government intervention is again needed. Public economics research can inform policy discussion about the impacts of inequalities, how effective public policies are in reducing them, and how policymakers can address possible tradeoffs between economic efficiency and distributional equity.

At the core of public economic analysis are various policy measures, including taxes, provision of public goods, and regulatory actions. Research in contemporary public economics is increasingly empirical.  Impact evaluation methods and sufficient statistics approaches are used to attempt to credibly estimate the impact of policy instruments and reforms on taxpayer and individual behavior.

University of Helsinki and VATT Institute for Economic Research are part of the Finnish Centre of Excellence in Tax Systems Research, led by Professor Kaisa Kotakorpi of Tampere University.