Public finance always was a normatively oriented subject of study. Modern textbooks about ‘public economics’ build on this tradition but intersperse exposition about normative themes with pieces of analysis about the actual course of decision-making. In that approach, the positive sections serve to add a flavour of pragmatism to the main arguments about ‘motives for public intervention’ and ‘optimal allocation’. This Introduction moves the opposite way: it focuses on the positive theory of the budgetary process and adds some pieces of normative analysis by way of critical perspective. For those who are interested in positive analysis, this approach has the advantage that the relevant theoretical ideas can be developed systematically and in their natural order.

The positive economic theory of the budgetary process belongs, by method and subject, to the field of ‘public choice theory’. This exposition builds particularly on two important themes of that field, namely the model of legislative demand and the model of agency supply. However, no prior knowledge of public choice theory is assumed; all relevant concepts and ideas are introduced and developed in the text. The only desirable prerequisite is an elementary knowledge of microeconomic theory.

This book is conceived as a systematic introduction to the positive theory of the budgetary process. As such, it aims to serve a double purpose: it should be suitable for use in a public finance or public economics course for economics students, possibly alongside a more normatively oriented textbook, and it should be useful to public sector economists who want to improve their knowledge of positive theory.