Public Expenditure
Public expenditure represents government spending on goods, services, and social programs.
Meaning in Practice
Public expenditure includes spending on healthcare, education, infrastructure, and defense. It is financed primarily through tax revenues and borrowing. The level of spending reflects fiscal priorities and economic strategy.
Why It Matters
Government spending influences economic growth, employment, and aggregate demand. Excessive spending without revenue support can widen deficits. It plays a central role in fiscal policy management.
Market Impact
Rising public expenditure can stimulate short-term growth but may increase borrowing needs. Markets assess whether spending is sustainable relative to revenue. Bond yields often react to changes in fiscal outlook.
Example
An increase in infrastructure investment raises public expenditure and can support economic activity.