Question

What are some important short theories about Public Finance ?

Answer 1

Richard A. Musgrave, an economist who has been called the father of modern public finance, died Monday in Santa Cruz, Calif.

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.

Public expenditures, public revenue and particularly taxes may be considered to be the fundamental elements of public finance. Important terms derived from these three elements include deficit, public debt, budgetary policy and fiscal policy.

Government finance is important to achieve sustainable high economic growth rate. The government uses the fiscal tools in order to bring increase in both aggregate demand and aggregate supply. The tools are taxes, public debt, and public expenditure and so on.

The objectives of public finance are achieved by managing and drafting policies pertaining to key areas such as taxation, management of public revenue and expenditure, raising and servicing public debt, fiscal administration at various levels.