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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
In 10-month period total government financing reached P618.614 billion.
MPs were debating a government-drafted law that would reduce its reliance on government financing and become self-sustaining.
The new rules are based on the achievements and experience of last year's CNY3.2trn debt swap program, which intends to swap high cost local government financing vehicle borrowing with low interest muni bonds.
Ali said that the key benefits of these voucher schemes is that they provide choice to parents, offer a cost effective alternative to government financing and improve the learning among these children compared to their peers in government schools.
Macro indicators argue that, at less than 60 percent of GDP, China total public debt (central and local government debt, plus local government financing vehicles) is within manageable limits.
China is focusing on local government financing loans, warning the financial sector of the risks of spreading debt problems, Dow Jones has reported, citing a senior official of the China Banking Regulatory Commission.
During Jul-Mar FY10, the SBP provided Rs 66.8 billion through issuing of fresh MRTBs to the government though the government financing from the SBP decreased as compared to the same period last year.
During years in which countries' economies are doing fine, the requests for government financing decrease; in this case, our focus is on the private sector.
The business must have operated for at least one year since completing a major expansion or receiving government financing.
So-called "mini-public bonds" are new to the world of local government financing. The Ministry of Home Management, Public Affairs and Posts and Telecommunications deregulated local government bonds issuances this year to make it easier for a local entity to issue bonds in a small lot to the public.
By the time they need long-term care, it's too late for people to insure privately, and the path of least resistance is government financing. In this way, the system continues to spiral downward toward the ultimate collapse I've predicted for a decade, and which is in its latter stages today.
First, we have to wean the public and the industry off their excessive dependency on government financing. Second, we have to infuse long term care with a reliable source of private financing for assisted living and nursing homes.

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