Santosh Acharya's Blog

Background Public expenditure plays a fundamental role in economic development, governance, and social welfare. Over the years, economists and political scientists have developed several theories to explain government spending patterns. However, these theories have not remained static — they have undergone major paradigm shifts as new data, methodologies, and perspectives emerged. This article traces the evolution of these theories, spotlighting the key shifts that transformed how we understand public expenditure. 1. The Classical Paradigm: Wagner’s Law (Late 19th Century) Paradigm: Economic development leads to larger government. Adolph Wagner proposed that as economies industrialize and grow richer, government activities and expenditures naturally expand. Government spending shifts from traditional roles (defense, law enforcement) to welfare, infrastructure, education, and regulation. Why it was revolutionary: This was the first systematic theory linking economic gro...

This blog basically deals with the fundamental concept of monetary policy. This is assumed to be beneficial to beginners. Meaning of Monetary Policy It is a set of instruments adopted by the central monetary authority incorporating with the fiscal policy to control the price level. The monetary policy is defined as a discretionary action undertaken by the authorities designed to influence the supply of money and interest rate. Here the policy instruments are; Bank Rate, CRR, SLR, Repo and Reverse Repo, used to control the flow of money supply. Types of Monetary Policy Generally, monetary policy has been classified into two catagories: A. Based on the Objectives:  There are two sets of objectives viz.  A.1 Single-Minded Monetary Policy:  only aims to set a target either on inflation or nominal GNP growth etc . A.2 Multi-Objective Monetary Policy:  is responsible to accomplish multiple tasks viz. Monetary ( money supply, inflation and so on ) and De...

CONCEPT OF BUSINESS ECONOMICS A business is activities perform by any organization through utilizing its financial, human, technical and informational resources to achieve the pre determined objectives. In course of this action business organization must use its resources as efficiently as possible since they are limited in supply and there are costs in acquiring and using them. These include employees (known as labor), machinery and buildings (known as capital), and the land on which the buildings stand. Businesses also have the expertise of their top managers (known as entrepreneurs) who put the labor, capital and land together to produce the finished products most efficiently. Their purpose, amongst other things, is to ensure the business is profitable and grows. If losses are made over time the business will close. Hence, entrepreneurs must think about what and how the business produces, and its long term direction. Economics is, therefore, the study of how the resources la...

A)   Introduction National income accounting plays a prominent role in economic theory. While talking about national income somewhere we became little bit in confusion with the term national product. So initially we will find the right point to know about national income and national product first.   Both national income and product are flow quantities related to a given time dimension. While national product refers to the flows of final goods and services produced during any given period of time. National income represents the flow of total factors of earning available to purchase the net flow of goods and services in the economy during any given time period, generally one year. It is generally assumed that national income and national product becomes equals only if the market is functioning perfectly. G. Ackley has defined national income considering equivalent to national product as the economy's total current output of goods and services valued at the mark...