Expenditure Efficiency and the Optimal Size of Government in Developing Countries
AbstractGovernment efficiency plays a significant role in the relationship between government expenditure and economic growth. Based on panel data from 63 developing countries 1990 to 2003, we calculate efficiency scores using Data Envelopment Analysis, incorporate them into a simple model of growth with government expenditure. We find that there is a critical level of efficiency required for government expenditure to have positive effect on growth. Further, above a critical level of efficiency, greater efficiency lowers the optimal size of government expenditure required to maximize growth.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 10-20.
Length: 19 pages
Date of creation: Jul 2010
Date of revision:
Fiscal Policy; Government Expenditure; Public Sector Efficiency; Growth;
Find related papers by JEL classification:
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-17 (All new papers)
- NEP-DEV-2010-07-17 (Development)
- NEP-EFF-2010-07-17 (Efficiency & Productivity)
- NEP-FDG-2010-07-17 (Financial Development & Growth)
- NEP-PBE-2010-07-17 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Folster, Stefan & Henrekson, Magnus, 2001.
"Growth effects of government expenditure and taxation in rich countries,"
European Economic Review,
Elsevier, vol. 45(8), pages 1501-1520, August.
- Fölster, Stefan & Henrekson, Magnus, 1998. "Growth Effects of Government Expenditure and Taxation in Rich Countries," Working Paper Series 503, Research Institute of Industrial Economics, revised 20 Jun 2000.
- Fölster, Stefan & Henrekson, Magnus, 2000. "Growth Effects of Government Expenditure and Taxation in Rich Countries," Working Paper Series in Economics and Finance 391, Stockholm School of Economics.
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