The Two Pillars of Public Finance: Allocation & Distribution Explained

Public finance study government at all levels (national, provincial and local). Explicitly highlight the scope of public finance and major fiscal functions.

Absolutely, public finance delves into the financial activities of governments at all levels, including:

• National Level (Federal Government)

• Provincial Level (State or Regional Government)

• Local Level (Municipal or City Government)

• Public revenues and expenditures: This includes analyzing how governments raise money through taxes, fees, and other sources, as well as how they spend those funds on various programs and services.

• Allocation of resources: Public finance explores how governments decide how to distribute their financial resources effectively across different areas, such as education, healthcare, infrastructure, and social welfare programs.

• Allocation: This function involves determining how the government will spend its resources. It considers factors like efficiency and societal needs to allocate funds towards programs that provide the most benefit.

• Distribution: This function focuses on who will benefit from government spending. Public finance examines how tax structures and spending decisions impact income distribution and achieve a desired level of fairness.

Scope of Public Finance

Public finance examines a broad range of government activities related to money, encompassing:

Major Fiscal Functions

There are two main fiscal functions that public finance studies:

In essence, public finance aims to ensure that governments manage their finances efficiently and equitably to achieve their economic and social goals.