THE FORM in which a government's budget is presented reflects to some extent official attitudes toward the various components of receipts and expenditures, and it also influences popular interpretations of the government's program. In this respect the treatment of capital receipts and expenditures is especially important. A number of countries maintain separate capital and current budgets, and other countries accord special treatment by other means to at least a part of capital items. The advisability of introducing a capital budget has recently been under public discussion in several countries that have not used the device. At the same time, there have been indications that in some countries with established capital budgets the financial implications of the system are being reconsidered. This paper explores the economic implications of a dual government budget system involving separate capital and current budgets. It reviews the purposes that such systems appear to be intended to serve and criteria for distinguishing between capital and current items. The influence of a dual budget system on the amount and composition of government expenditures and means of financing is examined. Attention is also given to the problem of measuring government expenditures, receipts, and surplus or deficit when a separate capital budget is employed.'