Public finance

of Central Banks. This helps with cooperation between central banks and the Eurozone. The ECB chose a quantitative definition of price stability with three main reasons: to make monetary policy more transparent, provide a yardstick against what the public can hold the ECB accountable, and is

benefiting or hurting, on one of the two parties- either consumers or producers. Generally the public view taxes as a negative concept and subsidies as a positive one. Both of these two government regulated impositions create a wedge between the prices paid by buyers and the amount received by sellers and play a huge role in the economic world. Taxes can be defined as an involuntary fee that is imposed on the public and enforced by the government. A tax is essentially the same as a rise in costs and obtains

fiscal stimulus. The argument mostly centers on crowding out, a phenomena where government borrowing leads to higher interest rates that offset the simulative impact of spending. When the government runs a budget deficit, funds will need to come from public borrowing (the issue of government bonds), overseas borrowing, or monetizing the debt. When governments fund a deficit with the issuing of government bonds, interest rates can increase across the market, because government borrowing creates higher

Definitions of Fiscal Policy Many economists have been of the opinion that fiscal policy is not only ineffective, but can even be harmful in the long-run. Fiscal policy includes all of the interventions of a responsible economic policy concerning public spending and taxes that are made to influence the level of aggregate demand of the economy(Corsetti& Müller, 2012). An expansionary fiscal policy is aimed at raising the equilibrium level of income, while a restrictive fiscal policy is normally aimed

The European sovereign debt crisis, which made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties (Haidar, Jamal Ibrahim, 2012), had already badly hurt the economies in “PIIGS”, Portugal, Ireland, Italy, Greece and Spain. This financial contagion continues to spread throughout the euro area, and becomes a dangerous threat not only to European economy, but also to global economy. Although a commonly

plays a major part in facing this Greek financial debt crisis, which requires a major restructuring in the economic sector and to tighten stronger integration among EU member country. The primary focal point is on restoring the sustainability of public finances and addressing other macroeconomic imbalances by fostering fiscal discipline. In addition, new rules are set to ensure stronger and more effective economic governance, particularly in the euro zone area, with adequate mechanisms to monitor progress

In Foundations of Macroeconomics Seventh Edition by Bade and Parkin, chapter sixteen is titled Fiscal Policy. There are three objects for the chapter. The first object is to be able to “describe the federal budget process and the history of tax revenues, outlays, deficits, and debts”. The second object is to “explain how fiscal stimulus is used to fight a recession”. The third objective is to “explain the supply-side effects of fiscal policy on employment, potential GDP, and the economic growth

Deficit Spending Deficit spending is a situation where government expenditures will exceed its revenues hence causing a deep deficit. The government excess spending needs to be financed by borrowing mainly sourced from the foreign governments (Hassan, Nassar & Liu, 2014). Increased level of government spending assist in stimulating the economy since there is more money in flows, but the increased borrowing will cause adverse effect of raising the level of interest rates. Under deficit spending, a

much attention that even official media outlets felt the need to address it. The People’s Daily – usually regarded as the government’s voice – published an opinion piece titled “The government's Rmb 800,000 award to Li Na is against the ethics of public finance.” According to the article, "the government should provide more timely help to those who are in need, and less pointless gliding the lily.” It goes on saying that “Li Na is not short of money, Rmb 800,000 mean little to her. But there are a lot

increase of migration to urban areas, especially in the developing countries, and density of the population should require rising public expenditure on law and order in response to the expanded complexity of legal relationships and social conflicts. Also, as the economy grows and people’s income rises, government collects more taxes, consequently people demand more public goods and services, such as education, entertainment or less biased distribution of wealth and income, hence, the expenditure on