Public Finance

Abatement
Any action that reduces pollution or other harmful environmental damage.
Abatement Cost
The cost of reducing pollution, either for one more unit or for a total amount of cleanup.
Ability to Pay
The tax principle that people with greater economic capacity should bear more of the tax burden.
Active Labour Market Policies
Programs that try to improve employment outcomes by helping workers find jobs, build skills, or become cheaper to hire.
Ad Valorem Tax
A tax charged as a percentage of the value or price of the item being taxed.
Adaptation
Investment and behavior change that reduces the damage caused by climate change.
Administered Price
A price set or strongly shaped by a government, regulator, or dominant institution rather than left to market clearing alone.
After-Tax Income
Income remaining after direct taxes are paid, which helps determine household consumption, saving, and work incentives.
Age-Dependency Ratio
A ratio comparing dependent age groups with the working-age population, used to gauge demographic pressure on labor income and public finances.
Agricultural Protection
Policies such as tariffs, quotas, and subsidies that raise domestic farm prices or incomes relative to world-market outcomes.
Aid
A transfer of money, goods, or services intended to relieve hardship or support development, with important trade-offs around incentives and effectiveness.
Aid to Families with Dependent Children
A former U.S. means-tested cash assistance program whose structure raised classic questions about welfare support and work incentives.
Aid-in-Kind
Aid provided as goods or services rather than cash, often used when targeting or broken markets matter.
Anti-Pollution Measures
Policies that reduce pollution by pricing emissions, limiting them directly, or changing incentives.
Appropriation Bill
Legislation that authorizes the government to spend public money for approved purposes.
Atkinson Index
An inequality measure based on equally distributed equivalent income, with an explicit parameter for inequality aversion.
Austerity Measures
Policies that reduce budget deficits through lower public spending, higher taxes, or both.
Automatic Stabilizers
Built-in features of the fiscal system that soften booms and recessions without new legislation.
Average Cost Pricing
Pricing that sets price high enough to cover average total cost.
Averch–Johnson Effect
A distortion under rate-of-return regulation where firms may choose an inefficiently capital-intensive input mix.
Bad Bank
A vehicle that purchases and works out non-performing or distressed assets so core banks can clean their balance sheets.
Balanced Budget
A budget in which government revenue equals government expenditure over the chosen period.
Balanced Budget Amendment
A proposed constitutional rule requiring government expenditures not to exceed revenues within a fiscal year.
Balanced Budget Multiplier
In Keynesian models, equal increases in government spending and taxes raise output by exactly the spending increase.
Basic Rate
In UK taxation, the basic rate is the standard marginal income-tax rate applied to taxable income within the basic-rate band.
Baumol's Law
Baumol's law says service sectors with slow productivity growth become relatively more expensive as economy-wide wages rise.
Before-Tax Income
Before-tax income is income received before direct taxes are deducted.
Below-the-Line
Below-the-line items are entries recorded outside the main operating or income result, often relating to financing, appropriation, or capital transactions.
Benefit Principle
The benefit principle says taxes or charges should, as far as possible, be paid by those who benefit from the public spending or service.
Benefits
Benefits are the gains in utility, willingness to pay, or welfare created by consuming a good, taking an action, or adopting a policy.
Benefits in Kind
Benefits in kind are goods or services provided directly rather than paid out as cash.
Benefits System
A benefits system is the set of public programs that provide income support or services when households face low income, unemployment, disability, or other need.
Beveridge Report
The Beveridge Report was the 1942 UK report that helped shape the postwar welfare state through proposals for social insurance and full-employment policy.
Black Economy
The black economy consists of production, trade, and income that are hidden from the state to avoid tax, regulation, or legal detection.
Cost-Effectiveness
A decision criterion that compares policy or project costs to measurable outcomes when benefits are not fully monetized.
Greenhouse Gases
Gases that trap heat in the atmosphere; economically, emissions create a global negative externality through climate damages.
Housing Association
A non-profit housing provider that supplies below-market or regulated housing within local housing systems.
Income Tax
A tax on labor and capital income used to fund government spending and shape distribution outcomes.
Lump-Sum Tax
A fixed tax amount that does not depend on a taxpayer's choices; a benchmark for non-distortionary taxation.
New Deal
The package of policies adopted in the US in the 1930s under President Franklin D. Roosevelt to promote economic recovery from the Great Depression.
Not-for-Profit Organization
An organization that reinvests any surplus into its mission instead of distributing profits to owners.
Pension Rights
The economic value of future pension entitlements from public and occupational pension systems.
Quota (IMF)
Understanding the fundamental role of quotas within the International Monetary Fund (IMF).
Seigniorage
Revenue a government obtains by issuing money, closely related to the inflation tax.
Sovereign Debt
Debt issued by a national government, with risks tied to default, inflation, and macroeconomic sustainability.
Temporary Assistance to Needy Families (TANF)
A U.S. cash-assistance and welfare-to-work program for low-income families with children, administered largely by states.