What it means of public finance?

A general term encompassing both the spending by government and the methods used to pay for that spending, especially taxation and borrowing. http://www-personal.umich.edu/~alandear/glossary/p.html#PublicFinance The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defense is one example of non-rival consumption, or of a public good. "Market failure" occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed "government failure." Under broad assumptions, government decisions about the efficient scope and level of activities can be efficiently separated from decisions about the design of taxation systems (Diamond-Mirlees separation). In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised through a taxation system that creates the fewest efficiency losses caused by distortion of economic activity as possible. In practice, government budgeting or public budgeting is substantially more complicated and often results in inefficient practices. Government can pay for spending by borrowing (for example, with government bonds), although borrowing is a method of distributing tax burdens through time rather than a replacement for taxes. A deficit is the difference between government spending and revenues. The accumulation of deficits over time is the total public debt. Deficit finance allows governments to smooth tax burdens over time, and gives governments an important fiscal policy tool. Deficits can also narrow the options of successor governments. Public finance is closely connected to issues of income distribution and social equity. Governments can reallocate income through transfer payments or by designing tax systems that treat high-income and low-income households differently. The Public Choice approach to public finance seeks to explain how self-interested voters, politicians, and bureaucrats actually operate, rather than how they should operate.

Finance is also mainly used by individuals known as personal finance, then by governments called as public finance, and also by businesses in the form of corporate finance. A variety of other organizations including schools & non-profit organizations also make use of Finance in their various activities. Speaking in general, the aims of each of the above activities are achieved through the proper use of suitable financial instruments and methodologies, taking into consideration the institutional setting in each case.

Finance is also mainly used by individuals known as personal finance, then by governments called as public finance, and also by businesses in the form of corporate finance. A variety of other organizations including schools & non-profit organizations also make use of Finance in their various activities. Speaking in general, the aims of each of the above activities are achieved through the proper use of suitable financial instruments and methodologies, taking into consideration the institutional setting in each case.