Public Finance as Tool for Analysis

Public finance, more than an academic discipline, is a tool utilized to analyze the performance of the government of the day with regard to the delivery of public goods. The term “public good” is used to define a product, a type of service, and may include information and technology, which may not be readily afforded by people in an individual basis, and therefore government provision becomes the answer.

Public finance is concerned with how a government operates in raising funds or revenues, Public finance analysis puts into context the different and often contending forces which lead to government revenues.  The tax system, but not limited to only this, is taken into account along with facilitating and hindering factors of effective taxation.

The usage of funds or expenditures is technically deemed the most complicated part in the study of public finance.  Government expenditures form bulk of the analysis – presenting issues such as how different public goods are to be prioritized, whether the amount spent has yielded the most social benefits expected or not, and timing issues and future projections, to name a few.

Public finance also attempts to put values to the impacts with which the society as a whole must deal with, in terms of the mentioned fiscal operations. Generally, it is assumed that public finance is closely connected to concerns regarding an effective and just income distribution; most analysts of the political scenario may even claim that the ultimate goal of government must be to collect and use resources to promote social responsibility, and obtaining social equity.  This assumption critically puts public finance at the core of government role and action, more than a field of inquiry.