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More on Three Basic Issues in Public Finance

【Authors】
WU Junpei
【WorkUnit】
Wuhan University, 430072.
【Abstract】

The paper mainly discusses three basic theoretical issues in public finance: the basic assumptions, the methodology, and the basic units of the public sector. Basic assumptions are the starting point of a discipline and also the basic criteria we rely on to explain the fundamental laws and principles of the discipline. Methodology determines how reliable the fundamental laws and principles can be. The basic unit represents the smallest object of research. A mainstream view is that the basic assumption of public finance is that the public sector is composed of “homo economics” as in the homo economics hypothesis; the main methodology is market simulation; and the basic unit is the collective of residents within the jurisdiction of a local government. This paper raises questions about these basic views and concludes that the basic assumptions of public finance theories are social justice and fairness, which are the highest criteria for dealing with all relationships within the scope of the discipline; the methodology of public finance is a combination of macroscopic and microscopic approaches to prove the system just and fair; and the basic unit of public finance research is the collective of residents within a residential community, which is where residents lead their day-to-day lives. The mainstream views concerning these three basic issues have had far-reaching influences, but they can no longer meet the requirements of modernization of national governance and need to be updated or reshaped.

JEL:B41, H00

【KeyWords】
Basic Theories of Public Finance, Methodology of Public Finance, Subject of Public Finance, State Governance, Fair, Justice