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This text tackles major problems confronting the American President, Congress and the American people: how can the way tax money is spent be improved, the efficiency of the economy be increased, and the distribution of income changed in socially desirable ways? This text provides a survey of the outstanding issues in public finance, reporting advances in the application of economic principles to taxation and public expenditure, and also drawing attention to fertile areas for future research. "Public finance" is too narrow a term to describe this discipline, for it covers most of the economic issues in which governments are involved: the provision of public goods (such as roads, schooling and national defence), taxation (including questions of equity and efficiency), expenditures (including cost-benefit analysis), and the allocation of economic decision making among different levels of government (fiscal federalism). In "Modern Public Finance", senior scholars in the field review and synthesize theoretical developments in important areas - optimal taxation, public sector dynamics, distribution theory and club theory, to name a few - which challenge the reader to understand and improve public policy. Each chapter highlights original research by a recognized leader in the field, relates this work to cumulative developments, and frames important questions for further study. "Modern Public Finance" should be of importance to graduate students and faculty in university and non-university research centres, and to economists who specialize in the field.