This paper extimates the optimal government size for the representative European country by investigating the role of public services in the production process. The empirical results support the following conclusions: (1) government services are significantly productive; (2) there is no evidence that government services (on average) are not optimally provided; (3) the optimal government size is 16 percent (+/- 3 percent) for the average International Comparison Program European country; and (4) the marginal productivity of government services may be negatively related to government size. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester
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