Public Finance | Learn Accounting: Notes, Procedures, Problems and Solutions

Positive Externalities and Allocative Efficiency

After reading this article you will learn about the relationship between positive externalities and allocative efficiency. Positive externality occurs whenever private markets fail to allocate resources on the basis of full social benefits. Immunization against communicable disease, external benefits from education at schools are typical examples of positive externalities. Individuals who are external to the market exchange are not required [...]

By Moheeth M|2016-07-12T14:18:14+00:00July 12, 2016|Public Finance|Comments Off

Corrective Policy and Negative Externalities

This article throws light upon the top three policies taken by government that will correct negative externalities. The policies are: 1. Taxation 2. Subsides 3. Regulation. Type # 1. Taxation: Corrective taxation of negative externality, forces market participants to account for the opportunity costs of all resources allocated in private market. Consider the case of a rubber processing industry in [...]

By Moheeth M|2016-07-12T14:18:14+00:00July 12, 2016|Public Finance|Comments Off

Stabilization Policy and Its Instruments

Stabilization Policy: Budgetary policy has its own bearing on the performance of a national economy. That is on targets such as high employment, a reasonable degree of price stability, soundness of foreign accounts and an acceptable rate of economic growth. These macro targets cannot be materialized automatically. But it requires deliberate and well planned policy guidance and packages. In the [...]

By Moheeth M|2016-07-12T14:18:14+00:00July 12, 2016|Public Finance|Comments Off

Archive | Public Finance

Positive Externalities and Allocative Efficiency

Corrective Policy and Negative Externalities

Stabilization Policy and Its Instruments