Who is the Father of Public Finance?
By BYJU'S Exam Prep
Updated on: November 9th, 2023
Richard A. Musgrave is the father of Public Finance. Public finance is the study of how the government affects the economy. It evaluates government revenue and expenditures made by public agencies. Other names for it include public economics and public sector economics.
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Father of Public Finance
In the 1950s and 1960s, Richard Musgrave changed the focus of economics from one that was descriptive and institutional to one that employed the concepts of microeconomics and Keynesian macroeconomics to analyze the impact of taxation.
In the Quarterly Journal of Economics, Musgrave published his groundbreaking article, “Voluntary Exchange Theory of Public Economy,” in 1939. This would eventually be changed by Paul Samuelson from a positive theory to a normative theory.
Components of Public Finance
Public finance provides an overview of how public finances are managed and what are its various components. The components of Public finance are:
- Tax Collection: It is the main revenue source for the government.
- Expenditures: It is the amount that the government spends on infrastructure, social programs, and education.
- National Budget: It is a plan of what the government intends to have as expenditures in a fiscal year.
- National Debt: It is the deficit that refers to the spending being greater than the revenue.
- Surplus/Deficit: Surplus is when the government has fewer expenditures than it collects in taxes. A deficit is a condition in which the government spends more than it collects in revenue.
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