ABSTRACT
Fiscal policy can be divided into two parts corresponding to the revenue side and the expenditure side. Revenue is mainly derived by the various levels of government from taxation. Public-sector enterprises may also be expected to make positive contributions, although in some cases this has proved to be an over-optimistic expectation. As will be shown in Chapter 5, the largest item on the expenditure side is social-policy spending. Other large expenditure items include education and defence. Policy interest, however, has been increasingly focused on the general level of government expenditure, along with the size of the budget deficit. Subsidies have been the object of particular attention. In both Chapter 8 and in the section on budgetary policy below, it will be emphasised that subsidies in the west were particularly at odds with the supply-side (free market) economics pursued after 1982 and with the problems associated with unification.
