State intervention in the economy caused by an objective tendency of the government to soften the inefficient and inequitable functioning market economy.The reasons for the state regulation of the economy are:
1) population growth;
2) addressing the infrastructure and the environment;
3) addressing unemployment, health, education, poverty, etc.
Public Economics is reflected in the share of national income, which is in the hands of the government.In this case, the control is in the same center.This kind of economy is typical for the majority of the socialist countries.
public sector - a set of functions of the state in the direct and indirect regulation.The first involves the direct participation of the government in the social and economic activities.Indirect regulation - is the management without investment when the state does without cost on their part.
Public Economics is aimed at solving the following tasks:
1) increasing its efficiency;
2) equity in the distribution of income;
3) support for macro-economic stability.
This can be done at the expense of public expenditure policy and income or through the mechanism of fiscal policy.Meanwhile, the economy of the public sector shows a tendency to increase state regulation of the market.However, the market economy imposes on the functioning of certain government rules and regulations.
market mechanism prevents a level of state intervention, in which the device may be destroyed.Effectively apply indirect methods of regulation, such as subsidies, taxes, and especially those that are organically built into the device market.
public sector of the economy is a system in which the government acts as an agent who receives income in the form of taxes and spending them to purchase.Traditionally, in developed and developing countries, public goods are produced by field of activity of the public administration sector.Tax is capable of releasing portion of the proceeds from the private sector.The state, in turn, sends the money to the production of public goods.
Public Economics in direct and indirect state regulation of performing governmental functions:
1) the use of the mechanism of the executive and the legislature to ensure the efficiency of the private activity;
2) holding the Government of a number of anti-trust or anti-monopoly laws in order to increase competition for the effective regulation of business;
3) a decrease in income inequality in the society;
4) the creation of infrastructure and public goods to meet the collective needs (national defense, information, health care, etc.).
As a result, the government is included in the circulation of market activity and becomes an integral part of it.
