The term war finance, a branch of defense economics, denotes a number of measures including fiscal and monetary initiatives to fund the expenditure of a war. Such measures, broadly classified in three categories, are levy of taxes, raising of debts, and creation of fresh money supply. Thus, these measures may include levy of specific taxation, increase and enlarging the scope of existing taxation, raising of compulsory and voluntary loans from the public, arranging loans from foreign sovereign states or financial institutions, as also creation of money by the government or the central banking authority.
Throughout the history of human civilization, from the ancient time until the modern era, conflicts and wars have always involved raising of resources and war finance has remained, in some form or the other, a major part of any defense economy.
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