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 ?
'This will require redoubling our efforts in public spending, in pushing infrastructure projects on 24/7 work mode,' the NEDA chief said.
Similarly, why is the expansive public spending not spurring productivity and accelerated wealth creation?
The results show that since the first such report in 2016, the gap between tax revenue and public spending has decreased in Wales from PS14.7bn, which is 24% of GDP, to the current figure of PS13.7bn, which is 19.4% of GDP.
The role of public spending in the process of economic growth has received a great deal of attention in the literature [see, for example, Barro (1990); Barro and Sala-i-Martin (1992); Devarajn, Swaroop, and Zou (1996); Easterly and Rebelo (1993); Glomm and Ravikumar (1997) and Ghosh and Mourmouras (2002)].
Experts at the Scottish Fiscal Commission have already warned that ministers may need to increase taxes or cut public spending as a consequence of income tax reconciliations.
While total public spending in the North has fallen by PS6.3bn since 2009/10, more than any other region, the south east and south west has seen a PS3.2bn rise, according to think-tank IPPR North.
Nonetheless, the aim of this article was not only to update the existing literature (Mueller 2003) on an area as important as public spending, but also to inform debate surrounding the contribution of macro econometrics to the dynamics of economic systems.
The IMF has called on the UK to increase public spending.
The goal of this paper is to empirically evaluate the impact of a modern and popular medium, the Internet, on public spending in China.
The Philippine economy rose at a faster pace in the third-quarter of the year amid the recovery of the export sector along with strong public spending and robust domestic demand, Socioeconomic Planning Secretary Ernesto E.
It is supposed to help improve the public institutions' financial operations and strengthen the oversight and transparency of public spending. Aleksandar Kolekeski, coordinator for the use of the IPA 2 program funds, says this draft strategy will help address the problem that the reports from Brussels have been pointing out for years.