government spending

Imagine two economists walking into a grocery store whose shelves are completely empty. One says: \"The problem is production — not enough goods are being created.\" The other one replies: \"No, the problem is demand — people aren’t spending, they’re saving. The state must stimulate consumption.\" This dispute still shapes how governments respond to crises, how they spend money, and how modern macroeconomic policy is justified.

One of the recommendations of last week\'s IMF mission in Bulgaria is to \"cool down wage growth in the public sector.\" This is not the first time that the IME has commented on the accumulation of risks to fiscal stability as a result of ill-considered decisions to increase spending, and in particular wages in the defense and security sectors over the past year.

Governments spend financial resources on various functions ranging from healthcare to social protection to education to defence and others. Inevitably, a part of public finance is allocated to the functioning of the bureaucratic system because general public services are necessary for other public services to exist.