A Government’s Economic Transactions

Government economic transactions play a significant part in any economic system, including collection of tax and funding public expenditure

A government collects, borrows and spends large sums of money and is thus a major actor in an economic system.  The scope of government spending (3.2.3) – which includes welfare, publicly funded services and the provision of infrastructure – and the taxes with which it funds that spending (3.2.4) affect the lives of the entire population.  Government economic transactions are therefore a hotly contested political matter (6.7.1), and in many countries they are considered so important that the government is not given a free hand, and its tax and spending decisions are exposed to the scrutiny of the legislature (5.1.3).

As an actor in the economy, a government is a major employer – so it is directly creating wealth for its employees.  It is also a buyer of goods and services, so its suppliers benefit from its spending programmes.  Government spending is so large that it affects the health of the whole economy, so its decisions are subject to what are referred to as macroeconomic considerations (3.3.8).



This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/3122.htm.