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Adam Smith (1723-1790) wasn't only the father of laissez faire capitalism; he also had a profound

Adam Smith (1723-1790) wasn't only the father of laissez faire capitalism; he also had a profound influence on the principles of sound public finance especially as it referred to the revenue raising powers and activities of

central government. He was an enemy of monopoly and distorted competition in markets and an advocate of free trade as long as the UK's military position was unharmed. In respect of taxation of he wrote in an era where taxation of the population was

characterized as being regressive meaning that larger shares of the income of poorer people were taken as revenue by the state than the shares of richer people's income.

He proposed that

there

should

be

a

proportional tax -- where everyone should pay the same proportion of their income to the state. In Smith's time this was viewed as a radical way of helping the poorer people in society. He did not appear to advance support for a progressive tax system (where richer people pay a higher share of their income to the state than poorer people) -- It is not wholly clear why he did not openly

support a progressive approach but it can be surmised that if marginal tax rates were constantly escalating and especially at lower levels of income, this would act as a disincentive for workers to offer more hours of work to their employer.

Jean Bodin, (born 1530, Angers, France — died June 1596, Laon), philosopher political French whose exposition

Jean Bodin,

(born

1530,

Angers,

Francedied June

1596,

Laon),

philosopher

political

French

whose

exposition of the principles of stable government was widely influential in Europe at a time when medieval systems were giving way to

centralized

states.

He

is

widely

credited

introducing

with

the

concept of sovereignty into legal and

political thought.

His contribution to public finance was that, he posited three principles of

 

finance:

a.

To follow a wise method in raising

revenues.

b.

To expand them with prudence.

To save a part for possible future needs.

c.

Jean Bodin, (born 1530, Angers, France — died June 1596, Laon), philosopher political French whose exposition

Thomas Hobbes, (born April 5, 1588, Westport, Wiltshire, Englanddied December 4, 1679, Hardwick Hall, Derbyshire), English philosopher, scientist, and historian, best known for his political philosophy, especially as articulated in his masterpiece Leviathan (1651). Hobbes viewed government primarily as a device for ensuring collective security.

His contribution to public finance was that, he formulated the exchange theory of public finance. He also declares that dependence on the domain was futile.

An Italian-born French civil engineer and economist. He was born in Fossano, Italy then under the
An Italian-born French civil engineer and economist. He was born in Fossano, Italy then under the

An Italian-born French civil engineer and economist. He was born in Fossano, Italy then under the rule of Napoleon Bonaparte. At the age of ten he immigrated to France with his family where he studied in Versailles winning a Physics prize at graduation. He then studied in the École Polytechnique as a civil engineer. He gradually took on more responsibility in various regional posts. He received a Légion d'honneur in 1843 for his work on the French road system, and shortly after moved to Paris. He also studied flood management in 1848 and supervised the construction of the Paris sewer system. He died in Paris.

Engineering questions led to his interest in economics, a subject in which he was self-taught. His 1844 article was concerned with deciding the optimum toll for a bridge. It was here that he introduced his curve of diminishing marginal utility. As the quantity of a good consumed rises, the marginal utility of the good declines for the user. So the lower the toll (lower marginal utility), the more people who would use the bridge (higher consumption). Conversely as the quantity rises (people allowed on the bridge), the willingness of a person to pay for that good (the price) declines.

An Italian-born French civil engineer and economist. He was born in Fossano, Italy then under the
An Italian-born French civil engineer and economist. He was born in Fossano, Italy then under the

French economist Leon Walras developed the idea of marginal utility and is thus considered one of the founders of the “marginal revolution.” But Walras’s biggest contribution was in what is now called general equilibrium theory. Before Walras, economists had made little attempt to show how a whole economy with many goods fits together and reaches an equilibrium. Walras’s goal was to do this. He did not succeed, but he took some major first steps. First, he built a system of simultaneous equations to describe his hypothetical economy, a tremendous task, and then showed that because the number of equations equaled the number of unknowns, the system could be solved to give the equilibrium prices and quantities of commodities. The demonstration that price and quantity were uniquely determined for each commodity is considered one of Walras’s greatest contributions to economic science.

A British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is
A British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is
A British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is

A British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is credited with systematizing economics in the nineteenth century, and was one of the most influential of the classical economists. Despite his relatively short career, Ricardo's work in economics was foundational to many later developments in the field. Both those who favored his laissez-faire capitalism, and those who opposed it, drew on his work despite their abstract formulation. - His law of rent was probably Ricardo's most notable and influential discovery. It was based on the observation that the differing fertility of land yielded unequal profits compared to the capital and labor applied to it. His other great contribution, the law of comparative cost, or comparative advantage, demonstrated the benefits of international specialization of the commodity composition of international trade.

A British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is

An Italian economist, sociologist, and philosopher. He was born on July 15, 1848, in Paris, France. His father was an Italian civil engineer and his mother was French. Trained in engineering, Pareto applied mathematical tools to economic analyses. While he was not effective in promoting his findings during his lifetime, moving on to sociological theorizing, Pareto's work, particularly what was later referred to as the 80-20 principlethat 80 percent of the wealth belongs to 20 percent of the populationhas been applied, and found useful, in numerous economic and management situations. Pareto's recognition that human society cannot be understood thoroughly through economic analyses alone, since human beings are not motivated by logic and reason alone but rather base decisions on emotional factors inspired the development of the "behavioralist" school of economic thought.

A British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is
A Filipina politician who was the 11th President of the Philippines, the first woman to hold
A Filipina politician who was the 11th President of the Philippines, the first woman to hold

A Filipina politician who was the 11th President of the Philippines, the first woman to hold that office and the first female president in Asia. Aquino was the most prominent figure of the 1986 People Power Revolution, which toppled the 21-year authoritarian rule of President Ferdinand E. Marcos and restored democracy to the Philippines. She was named Time magazine's "Woman of the Year" in 1986. Prior to this, she had not held any other elective office.

  • - Sought to bring back fiscal discipline in order as it aimed to trim down the government's budget deficit that ballooned during Marcos' term through privatization of bad government assets and deregulation of many vital industries. It was also during Aquino's time that vital economic laws such as the Built-Operate-Transfer Law, Foreign Investments Act and the Consumer Protection and Welfare Act were enacted.

  • - Promulgated two landmark legal codes, namely, the Family Code of 1987, which reformed the civil law on family relations, and the Administrative Code of 1987, which reorganized the structure of the executive branch of government and to enact local taxation measures and assured them of a share in the national revenue.

A Filipina politician who was the 11th President of the Philippines, the first woman to hold

A Filipino politician who was President of the

Philippines from 1965 to 1986. Economic performance during the Marcos era was strong at times, but when looked at over his whole regime, it was not characterized by strong economic growth. Penn World Tables report real growth in GDP per capita averaged 3.5% from 1951 to 1965, while under the Marcos regime (1966 to 1986), annual average growth was only 1.4%. To help finance a number of economic development projects, such as infrastructure, the Marcos government engaged in borrowing money. Foreign capital was invited to invest in certain industrial projects. They were offered incentives including tax exemption privileges and the privilege of bringing out their profits in foreign currencies. One of the most important economic programs in the 1980s was the Kilusang Kabuhayan at Kaunlaran (Movement for Livelihood and Progress). This program was started in September 1981. Its aim was to promote the economic development of the barangays by encouraging the barangay residents to engage in their own livelihood projects. The government's efforts resulted in the increase of the nation's economic growth rate to an average of six percent to seven

percent from 1970 to 1980.

A Filipina politician who was the 11th President of the Philippines, the first woman to hold
A Canadian-born professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize
A Canadian-born professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize

A Canadian-born professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize in Economic Sciences with James Mirrlees for their research into the economic theory of incentives under asymmetric information,

becoming the only Nobel laureate born in British Columbia. One of the most important economic

principles is that incentives affect people’s behavior.

It is also true that government officials virtually never know as much about the people their policies affect

as the people affected know about themselves. In economics, the fancy term for this fact is

“asymmetric information.” How, then, does a

government that is conscious of its ignorance set up incentives so that people will act in ways that are

useful, not only to themselves but also to others? William Vickrey spent his career studying this issue, in areas ranging from income taxation to auction design to subway fares and highway tolls. In the process, he made some striking discoveries. Vickrey also did early work in the theory of sealed-bid auctions. He showed that a second-price auction, whereby the highest bidder gets the item but pays only the price bid by the second-highest bidder, causes the good to be allocated to the person who values it most.

A British economist and winner of the 1977 Nobel Memorial Prize in Economic Sciences jointly with the Swedish economist Bertil Ohlin for their "pathbreaking contribution to the theory of international trade and international capital movements." Meade was brought up in the city of Bath, Somerset in south-west England. The basic assumptions for J.E.Meade's model are as follows:

(1) The economy in question is a closed economy with no relationship with the outside world. (2) There is no government activity involving taxation and expenditure. (3) Perfect competition exists in the market. (4) Constant returns to scale prevails in the economy. (5) There are only two commodities- consumption good and a capital good. (6) There is full employment of land, labour and machinery. (7) All machinery are alike and the ratio of labour to machinery can be easily varied, hence there is perfect malleability of machinery. (8) There is perfect substitutability between capital goods, consumption goods and any given stock of machines, no matter how old or new they are, a certain percentage gets replaced every year. Meade calls this phenomenon the assumption of depreciation by evaporation.

A Canadian-born professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize
An American economist of German heritage who has been called the father of modern public finance
An American economist of German heritage who has been called the father of modern public finance
An American economist of German heritage who has been called the father of modern public finance
An American economist of German heritage who has been called the father of modern public finance

An American economist of German heritage who has been called the father of modern public finance. His most cited work is The Theory of Public

Finance (1959), described as "the first English- language treatise in the field." and "a major contribution to public finance thought." Mr. Musgrave had a different view, his wife said. He saw the government as having an important economic role and developed a theory on the way taxes and other factors interact in areas where goods and services roads, schools, courts and national defense, for example were best provided by the government. In essence, Mr. Musgrave’s theory broke down

governmental economic activity into three parts: the allocation of resources; the distribution of goods and services; and the stabilization of the broader economy. The theory paid particular attention to the process of determining what people want and need in the absence of a pricing system.

An American economist of German heritage who has been called the father of modern public finance
An American economist of German heritage who has been called the father of modern public finance

Edgeworth was an Irish economist (1845-1926), professor of Political Economy at the University of Oxford, whose most important contributions to economic science were statistical in nature, primarily in the area of index numbers, highlighting also the mathematical apparatus needed for the drawing of indifference curves and the contract curve, from the first analysis of W.S. Jevons. Although it would be Vilfredo Pareto, in 1906, who would draw an indifference map, as we know the representation of various indifference curves nowadays. Edgeworth designed what is now known as an Edgeworth box, which basically allows us to compare two mathematical functions represented as curves using the same axis. In 1894, Edgeworth published a diagram in “Theory of International Values” explaining the terms of trade from a geometrical

perspective, basing this article on J. S. Mill‘s work

on trade and his theory on reciprocal demand.

Irving Fisher was an American economist (1867- 1947), professor of Political Economy at Yale University, known
Irving Fisher was an American economist (1867- 1947), professor of Political Economy at Yale University, known

Irving Fisher was an American economist (1867- 1947), professor of Political Economy at Yale University, known for his contributions to quantitative

economics (works such as “The Nature of Capital

and Income”, 1906, and “The Purchasing Power of Money”, 1911) and especially the development of

index numbers. He also addressed interest rates, in his opinion governed by two interacting forces: the impatience of individuals in terms of exchanging future income for current income, and the principle

of yield paid by doing so. In his “Appreciation and

interest”, 1896, Fisher showed the relation between

the nominal interest rate (i), the real interest rate (r)

and inflation (Π) using an equation, known

nowadays as the Fisher equation:

i ≈ r + Π

Irving Fisher was an American economist (1867- 1947), professor of Political Economy at Yale University, known

Pigou was a British economist (1877-1959), disciple of Alfred Marshall, whom he succeeded as a

professor at Cambridge. Pigou is remembered above all as a precursor of welfare economics, for

his books “Wealth and Welfare”, 1912, and “The Economics of Welfare”, 1920, in which he used

measures of national income and its distribution in order to understand how wealth and welfare are related. He is also remembered for making a

distinction between different discrimination.

degrees

of

price

Irving Fisher was an American economist (1867- 1947), professor of Political Economy at Yale University, known