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Fridays Academy: Fiscal policy: Public Expenditure and Finance

Ignacio Hernandez's picture

From Raj Nallari and Breda Griffith's lecture notes.


Public expenditure

Public expenditure is a measure of the value of goods and services bought by the State. Public expenditure is capable of playing four main roles: it contributes to current effective demand; it can be used for stabilization purposes; it increases the public endowment of goods and can be used for redistributive purposes; and it can give rise to positive externalities to the economy and society, especially through its capital component.