Flashcards in Public Expenditure Deck (9)
What is public expenditure?
Government spending includes all forms of spending by central government and local governments
What are the three main types of spending?
1. Capital expenditure
2. Current expenditure
3 transfer payments
What does capital spending include?
Capital projects and creating new assets. Investing to increase capital stock of the economy--- hospitals and roads
What does current expenditure include?
Items that are recurring and only last a limited time --- teachers wages and public sector
What does transfer payments include?
From the government to individuals -- welfare payments
What are the two key measures of government spending?
1. Real government spending - adjusted for inflation
2. Government spending as a % of GDP- share of national income
Factors influencing the amount of public expenditure (4)
1. State of the economy-- level of unemployment
2. How efficient the market is- if efficient less spending as no market failure
3. The system of the market- different countries
4. Equity and Equality- if inequitable distribution of resources- GS increase and with inequality
Impacts of higher government spending (3)
1. More investment in education and infrastructure -- positive externalities help
2. Retribution of income
3. Fiscal policy- in recession