EFFECTS OF PUBLIC EXPENDITURE ON PRODUCTION, INCOMES AND EMPLOYMENT IN FINLAND

This study examines the effects of public expenditure on production activity and private consumption activity. An input-output model with consumption functions connected is used for evaluating the repercussions of public expenditure. Taking both production and consumption repercussions into account, it is concluded that in the year 1965 public expenditure generated 26 percent of domestic incomes and 18 percent of imports. Viewed in terms of the shares of different types of income generated, 72 percent of public expenditure goes to domestic income, and the remaining 28 percent to imports. Forty-five percent of public expenditure returns directly as income to general government. The study also examines the effects of public expenditure by industry and over time (1959 to 1965).