public finance

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public finance

the branch of economics concerned with the income and expenditure of public authorities and its effect upon the economy in general. When the CLASSICAL ECONOMISTS wrote upon the subject of public finance, they concentrated upon the income side, TAXATION. Since the Keynesian era of the 1930s, much more emphasis has been given to the expenditure side and the effect that FISCAL POLICY has on the economy.

The PUBLIC SECTOR is so large a part of most economies that it influences virtually every aspect of economic life, either through its own expenditure on goods and service provided by the private sector, its wage payments to public-sector employees, or its social security payments (pensions, sickness and unemployment benefits). Similarly, the financing of these expenditures by means of various taxes (income tax, value-added tax, corporation tax, etc.) affects the size and pattern of spending by individuals and businesses.

Governments plan their revenue and expenditure each fiscal year by preparing a budget (see BUDGET ( GOVERNMENT)). They may plan to match their expenditure with their revenue, aiming for a BALANCED BUDGET; or they may plan to spend less than they raise in taxation, running a BUDGET SURPLUS and using this surplus to repay former public debts (see NATIONAL DEBT); or they may plan to spend more than they raise in taxation, running a BUDGET DEFICIT that has to be financed by borrowing (see PUBLIC-SECTOR BORROWING REQUIREMENT).

As well as serving as the instrument of government planning of its own economic and social commitments, the budget plays an integral role in the application of fiscal policy, specifically the operation of DEMAND MANAGEMENT policies to reduce unemployment and inflation. See KEYNESIAN ECONOMICS, PROGRESSIVE TAXATION.

References in periodicals archive ?
Improving oil prices, which are narrowing fiscal deficits, as well as an ongoing commitment to public spending and a supportive stance towards government-related issuers will underpin the stable outlook on GCC companies over the next 12 months," Rehan Akbar, vice-president and senior analyst at Moody's, said in a report.
We attribute the country's growth performance to sustained growth in exports--our net export, exports minus imports--grew very fast during the third-quarter, improvement in public spending which boosted the manufacturing sector and the services sector," Penria said in a briefing.
Some non-governmental organizations say that public spending is not transparent enough.
NBK chairman Nasser al-Sayer attributed the rise to an increase in public spending in the oil-rich Gulf state despite low oil revenues.
The analysis of public spending published by the Treasury shows transport spending in the North East was PS574 per person over a year.
In 2016 there is a projected increase in public spending of e1/4100 million, which safeguards the achievement of targets without expanding deficits and prompting new measures by imposing new taxes," he said.
If Labour lost control of public spending, why did the Tories say in 2008 that they'd stick to Labour's spending plans?
Because the national debt share is falling a year earlier than forecast at the Autumn Statement, the squeeze on public spending ends a year earlier too.
If the Conservatives are elected in May, they plan even deeper cuts to public spending to 35% of GDP, taking us back to the 1930s before the creation of the NHS.
THE scale of public spending cuts planned by the Conservatives means a "real risk" that patients will face more charges for NHS services, Labour has claimed.
this will help the government to stabilize public spending and maintain fiscal buffers while promoting broad-based, private sector led economic growth.