Concept of Public Finance

The concept of public finance deals with the budgeting techniques of the income and expenditures of a public sector organization, normally government or federal organization. Public finance is also termed as government finance and it is an important sector of finance and economics.

The concept of public finance focuses on the following factors:

  • Tax incidence (the party which is actually paying a specific tax)
  • Efficiency of government

The government’s function in accomplishing distribution of income with the help of taxation, transfer payments and government expenditure on commodities
The effectiveness and distribution results of various types of taxes, such as consumption tax and income tax
The ambit of government functions taking into consideration the markets, public goods, and externalities
Supply of commodities and services as prescribed by the government versus voluntary interchange
Public expenditure model, fiscal politics, and taxation policies
The revenue earned by the government by imposing different types of taxes is utilized in various types of public or social utility projects.

The financing process of the government is performed with the help of the following means:

  • Borrowing or taking loans
  • Taxation
  • Seigniorage
More Information Related to Finance Theory
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Long Terms Financing Yield Curve Arbitrage
Finance Services Company Arbitrage Pricing Credit Derivative
Binomial Options Pricing Model Capital Asset Pricing Model Cox Ingersoll Ross Model
Black Model Black Scholes Model Chen Model
Liquidity Risk Commodity Risk Consumer Credit Risk
Systemic Risk Currency Risk Market Risk
Interest Rate Risk Settlement Risk Equity Risk
Gordon Model Monte Carlo Option Model Ho Lee Model
Rendleman Bartter Model Vasicek Model Hull White Model
Rational Choice Theory Modern Portfolio Theory Cumulative Prospect Theory
Efficient Market Hypothesis Arrow Debreu Model International Fisher Effect
Floating Currency Financial Risk Management Hyperbolic Discounting
Personal Budget Floating Exchange Rate Discount Rate

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