Public Finance and Economic Development

This chapter will analyze the interrelationships of public finance and economic development. The following aspects of public finance will be considered: the budget deficit (or surplus), the size of the public sector, and public investment. Apart from the financing of the budget deficit, the chapter will examine its possible effects on various economic variables. The relationship between the size of the government budget and economic growth will also be analyzed. Finally, the impact of public investment on private investment, total investment, and economic growth will be investigated.