Public finance
This article is part of the series:
Finance and Taxation
Taxation
Income tax · Payroll tax
CGT · Stamp duty · LVT
Sales tax · VAT · Flat tax
Tax, tariff and trade
Tax haven
Tax incidence
Tax rate · Proportional tax
Progressive tax · Regressive tax
Tax advantage · Fixed tax
Taxation by country[show]
Australia • British Virgin Islands
Canada • China • Colombia
France • Germany • Hong Kong
India • Indonesia • Ireland
Netherlands • New Zealand
Peru • Russia
Singapore • Switzerland
Tanzania • United Kingdom
United States • European Union
v • d • e
Tax rates around the world
Tax revenue as % of GDP
Economic policy
Monetary policy
Central bank • Money supply
Gold standard
Fiscal policy
Spending • Deficit • Debt
Policy-mix
Trade policy
Balance of trade
Tariff • Trade agreement
Finance
Financial market
Financial market participants
Corporate · Personal
Public · Regulation
Banking
Fractional-reserve · Full-reserve
Free banking · Islamic banking
Deposit insurance
view • talk • edit • project
In economics, Fiscal policy refers to government attempts to influence the direction of the economy through changes in government taxes, or through some spending (fiscal allowances). It is the use of government spending and revenue collection to influence the economy.[1]
Fiscal policy can be contrasted with the other main type of economic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy:
* Aggregate demand and the level of economic activity;
* The pattern of resource allocation;
* The distribution of income.
Fiscal policy refers to the overall effect of the budget outcome on economic activity. The three possible stances of...