Study title

Public expenditures are an important tool of the government to carry out its tasks and to reach specified target values of state tasks. The State (= public sector) with its diverse economic activities is an important part of the economic process. It contributes not only directly but also indirectly and to a significant extent to the formation, distribution, and use of domestic product. Revenues and expenditures are the instruments of fiscal policy. This area of public finance is usually at the beginning of the analysis, because the task fulfillment is most expressed in practical functions of public spending. The political relevant question in the field of public expenditure is in this context, for which areas of government activities the financial resources are used. The functional structure of government spending may be indicative in a qualified sense of the political priorities. The functional classification of government expenditure by function is one of many ways to structure the diversity of public expenditure. The institutional structure shows to what extent the individual corporations contribute to the financing of total expenditure (with ‘individual corporations’ is meant regional corporations as: federal government, German Laender (or German States), local authorities, as well as social security, associations of communes, special funds of the federal government, and financial shares of the EU). In conjunction with the functional classification the institutional structure also shows what are the expenditure’s priorities and the main field of activity of the various public authorities and budgets. In terms of the public spending’s overall economic efficiency the most important criterion is the issue whether and how macro-economic resources are used. This criterion is reflected by the aggregate classification (national accounts) of expenditures into so called transfer expenditures: payments to the enterprises (grant-in-aid), payments to private households...