Public finance

Introduction: According to Kenya’s geopolitical and economics situation, applying monetary-fiscal policy mix is mutually reinforcing and therefore more effective. Failure to coordinate these policies is potentially dangerous as it may lead to slow growth of the economy and cause surges in inflation. Our research seeks to address the following specific questions: • How does the fiscal policy behave over the business cycle? • How does the monetary policy behave over the business cycle? 1

Only eight times in the past 60 years has Britain 's budget been in surplus, most recently in 2001-2002. A budget surplus occurs when tax revenue is greater than government spending and interest payments. Therefore, the government can use the surplus revenue to pay off the national debt. The budget deficit is the annual amount the government has to borrow to meet the shortfall between current receipts (tax) and government spending, for example by the end of 2009-10 our annual deficit was £170.8 billion

according to the Germany’s ministry of finance. These increased debt levels were largely caused by huge bailout packages provided to the financial sector during the 2009 financial crisis and the global economic slowdown thereafter. The average public deficit in the Eurozone was only 0.7 percent of GDP in 2007 but by 2010, it had jumped to over 6 percent. The Eurozone’s public debt also rose from 66 to 85 percent of GDP in 2010. However, the post-crisis public debt issue was not just a European trend

activity and contractionary which is linked to decreasing government spending to lower economic activity. The financial crisis of 2008-2009 uncovered an unstable and unbalanced model of economic growth in the UK, which was based on growing levels of public and private sector

debts. This situation of default payments by governments lead to European crisis. With onslaught of the recession and subsequent introduction of various financial stimulus packages, the government expenditure like public job creation, pensions, social benefits etc ..on various countries took on

considerable part of available resources toward essential investments that provide necessary goods and services consumed mainly by the vast majority of population. 3.1 Evaluating the Economic Role of Fiscal Policy Investment spending (private and public) is the main engine to stimulate economic growth. Securing adequate savings is a prerequisite for any investment spending; however, investment projects need not just to secure adequate funding to cover their investment costs during construction periods

Introduction & Background In America, when the country first originated it was based on the principle of freedom. This freedom applied to the rights of the citizen but also to the market and the economy. A free market economy is one where control of the government is not an issue in the way that the economy operates. Instead, the determination of where and how many resources are allocated to each market comes from what the people of the country want. This classical approach of how the economy operates

fiscal policy can be modulated are taxes (imposed by the government) and government expenditure (also known as public expenditure). Decisions about fiscal policy are in the hands of the ministry of finance i.e. the United Kingdom – HM Treasury. Taxes can be altered by the policymakers resulting in a shift again with the AD curve like unemployment benefits. Government expenditure (G) are public expenses on goods and services, for instance, spending on education; improving labour productivity and, therefore

budget deficit will have no effect on national saving- the sum of private and public saving, in an economy. In this essay I am going to explain the reasoning behind this, assess its likelihood and finally review evidence either supporting or opposing the theorem. In an economy, if government spending exceeds government revenues, borrowing money (for example by issuing government bonds or increasing taxation) can finance the deficit. Ricardian Equivalence states

Treisman argues that decentralization could reduce efficiency and quality of public services, especially in the absence of a regulative assignment of responsibilities between central and regional government (Treisman, 2000). Eckardt criticizes that the bulk of the resources re-arranged during fiscal decentralization has done little