Public finance looks at the government sector of the economy and assesses government revenue and government expenditure. Public finance also focuses on the effects the government has on the allocation of resources, the distribution of income, and the stabilization of the economy. The distribution and production of public goods and taxes is managed by the government to benefit the economy. Market failure occurs when goods and services are not distributed correctly and the government's role is to prevent this from happening.
The allocation of resources and resource utilization are part of the public financial management system. Public finance management includes expenditure management, the prioritization of programs, resource management, and other major economic managerial decisions. The economic activities that the government takes to improve public resources include taxation and public debt.
The data that the government uses to make decisions is based on “budgetary statistics” and “monthly statistics of government finance and banking”¹. The government allocates its budget into different separate accounts, which include general accounts and special accounts¹.
The public authority will adjust income to expenditure and will most often try to balance budget each year. Public expenditure is a main topic of discussion in public finance because it entails the total consumption and investment made by the government.
1. Public Finance. Retrieved from www.stat.go.jp/english/data/nenkan/1431-05e.htm