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Sizing the Government

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  • De Witte, Kristof
  • Moesen, Wim

Abstract

Is there such a thing as an optimal government size? We investigate by the non-parametric Data Envelopment Analysis (DEA) the so-called `Armey curve' which claims an inverted U-shaped relationship between government size and economic performance. The DEA scores are linked to control variables as initial per capita income, openness, population density, urbanization, country size and family size. For 23 OECD-countries we estimate the country specific efficiency scores, which reveal the extent to which a country uses excess public resources to achieve the observed growth rate of GDP.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14785.

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Date of creation: 22 Apr 2009
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Handle: RePEc:pra:mprapa:14785

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Keywords: Data Envelopment Analysis; Government size; Public sector performance; Armey-curve;

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References

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  1. Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
  2. Afonso, António & Schuknecht, Ludger & Tanzi, Vito, 2006. "Public sector efficiency: evidence for new EU member states and emerging markets," Working Paper Series 0581, European Central Bank.
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  4. António Afonso & Ludger Schuknecht & Vito Tanzi, 2005. "Public sector efficiency: An international comparison," Public Choice, Springer, vol. 123(3), pages 321-347, June.
  5. Joel Slemrod, 1995. "Involvement, Prosperity, and Economic Growth?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 373-431.
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  7. International Monetary Fund, 2001. "Transition Economies: How Appropriate is the Size and Scope of Government?," IMF Working Papers 01/55, International Monetary Fund.
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  9. Margarita Katsimi, . "Explaining the Size of the Public Sector," Economics Discussion Papers 461, University of Essex, Department of Economics.
  10. Afonso, António & Furceri, Davide, 2010. "Government size, composition, volatility and economic growth," European Journal of Political Economy, Elsevier, vol. 26(4), pages 517-532, December.
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  12. Scully, Gerald W, 2001. " Government Expenditure and Quality of Life," Public Choice, Springer, vol. 108(1-2), pages 123-45, July.
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Cited by:
  1. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
  2. J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
  3. Alfred Wu & Mi Lin, 2012. "Determinants of government size: evidence from China," Public Choice, Springer, vol. 151(1), pages 255-270, April.
  4. Shanaka Herath, 2012. "Size Of Government And Economic Growth: A Nonlinear Analysis," Economic Annals, Faculty of Economics, University of Belgrade, vol. 57(194), pages 7-30, July - Se.

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