Question

Is public finance a positive or a normative science?

Answer 1

Public finance is generally considered both positive and normative. As a positive science, it deals with facts and analysis, explaining how government policies impact the economy. For example, it analyses the effects of taxes on consumer behaviour or government borrowing on interest rates. As a normative science, it involves making value-based judgements and recommendations, suggesting what government policies ought to be. For example, it suggests how tax policies can be used to reduce income inequality or improve social welfare.