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Public and Private Inputs in Aggregate Production and Growth: A Cross-country Efficiency Approach

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  • António Afonso
  • Miguel St. Aubyn

Abstract

In a cross section of OECD countries we replace the macroeconomic production function by a production possibility frontier, TFP being the composite effect of efficiency scores and possibility frontier changes. We consider, for the periods 1970, 1980, 1990, 2000, one output: GDP per worker; three inputs: human capital, public physical capital per worker and private physical capital per worker. We use a semiparametric analysis, computing Malmquist productivity indexes, and we also resort to stochastic frontier analysis. Results show that private capital is important for growth, although public and human capital also contribute positively. A governance indicator, a non-discretionary input, explains inefficiency. Better governance helps countries to achieve a better performance. Non-parametric and parametric results coincide rather closely on the countries movements vis-à-vis the possibility frontier, and on their relative distances to the frontier.

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Bibliographic Info

Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2010/09.

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Date of creation: May 2010
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Handle: RePEc:ise:isegwp:wp92010

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Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC

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Keywords: economic growth; public spending; efficiency; Malmquist index.;

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  1. Christophe Kamps, 2004. "New Estimates of Government Net Capital Stocks for 22 OECD Countries 1960-2001," IMF Working Papers 04/67, International Monetary Fund.
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  9. António Afonso & Miguel St. Aubyn, 2005. "Cross-country Efficiency of Secondary Education Provision: a Semi-parametric Analysis with Nondiscretionary Inputs," Working Papers Department of Economics 2005/05, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
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Cited by:
  1. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2013. "Does cutting back the public sector improve efficiency? Some evidence from 15 European countries," CEIS Research Paper 274, Tor Vergata University, CEIS, revised 30 Apr 2013.
  2. António AFONSO, & Mohamed AYADI, & Sourour RAMZI, 2013. "Assessing productivity performance of basic and secondary education in Tunisia: a Malmquist analysis," Working Papers Department of Economics 2013/19, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.

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