Public finance

Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.

Overview

The purview of public finance is considered to be threefold: governmental effects on (1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization.

Government revenue

Government revenue includes all amounts of money received from sources outside the government entity. Large governments usually have an agency or department responsible for collecting government revenue from companies and individuals.

Government expenditure

Government expenditure refers to the purchase of goods and services, which include public consumption and public investment, and transfer payments consisting of income transfers (pensions, unemployment insurance, family allowances) and capital transfer.

Public debt

Public debt or government debt refers to the debt owed by a central government. As the government draws its income from much of the population, public debt is an indirect debt of the taxpayers.

Fiscal policy

Fiscal policy is the use of government revenue collection and expenditure to influence a country's economy.

Public finance management

Public finance management involves the identification of required expenditure of a public sector entity, sourcing the cash needed, driving the budgeting process, procurement of goods and services and delivering efficient and effective public services.

See also

• Public economics
• Government budget
• Public sector
• Public choice
• Public goods
• Public provision