IDEAS home Printed from https://ideas.repec.org/p/osk/wpaper/1020.html
   My bibliography  Save this paper

Expenditure Efficiency and the Optimal Size of Government in Developing Countries

Author

Listed:
  • Yogi Rahmayanti

    (Osaka School of International Public Policy, Osaka University)

  • Theara Horn

    (Graduate School of Economics, Osaka University)

Abstract

Government 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.

Suggested Citation

  • Yogi Rahmayanti & Theara Horn, 2010. "Expenditure Efficiency and the Optimal Size of Government in Developing Countries," Discussion Papers in Economics and Business 10-20, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1020
    as

    Download full text from publisher

    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1020.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kimaro, Edmund Lawrence & Keong, Choong Chee & Sea, Lau Lin, 2017. "Government Expenditure, Efficiency and Economic Growth: A Panel Analysis of Sub Saharan African Low Income Countries," African Journal of Economic Review, African Journal of Economic Review, vol. 5(2), July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jing Xing, 2011. "Does tax structure affect economic growth? Empirical evidence from OECD countries," Working Papers 1120, Oxford University Centre for Business Taxation.
    2. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2021. "How does public spending affect technical efficiency? Some evidence from 15 European countries," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 108-130, January.
    3. Antonio Afonso & Jose Alves, 2015. "The Role of Government Debt in Economic Growth," Hacienda Pública Española / Review of Public Economics, IEF, vol. 215(4), pages 9-26, December.
    4. Sayef Bakari & Ali Ahmadi & Sofien Tiba, 2020. "The Nexus among Domestic Investment, Taxation, and Economic Growth in Germany: Cointegration and Vector Error Correction Model Analysis," Journal of Smart Economic Growth, , vol. 5(1), pages 37-47, May.
    5. Matthew Higgins & Daniel Levy & Andrew T. Young, 2003. "Growth and Convergence across the US: Evidence from County-Level Data," Working Papers 2003-03, Bar-Ilan University, Department of Economics.
    6. INCEU Adrian Mihai & ZAI Paul, 2012. "Budget Revenues In Eu-27," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 0(4), pages 342-351.
    7. Torberg Falch & Justina AV Fischer, 2008. "Does a generous welfare state crowd out student achievement? Panel data evidence from international student tests," TWI Research Paper Series 31, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    8. Alimi, R. Santos, 2018. "Growth effect of government expenditures in West African countries: A nonlinear framework," MPRA Paper 99108, University Library of Munich, Germany, revised Mar 2019.
    9. Andrea Bassanini & Stefano Scarpetta, 2003. "The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 9-56.
    10. AVRAM Veronel & TOGOE Greti Daniela, 2012. "Considerations Regarding The Patrimonial Inventory In The Spirit Of European Acconting Regulations," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 0(4), pages 3-7.
    11. Magnus Henrekson & Jesper Roine, 2007. "Promoting Entrepreneurship in the Welfare State," Chapters, in: David B. Audretsch & Isabel Grilo & A. Roy Thurik (ed.), Handbook of Research on Entrepreneurship Policy, chapter 5, Edward Elgar Publishing.
    12. Sheng-Tung Chen & Chi-Chung Chen & Yoonbai Kim, 2011. "Economic Growth and Government Size in OECD Countries: New Evidence from the Quantile Regression Approach," Economics Bulletin, AccessEcon, vol. 31(1), pages 416-425.
    13. Narayan Sethi & Saileja Mohanty & Sanhita Sucharita & Nanthakumar Loganathan, 2020. "Tax Reform And Economic Growth Nexus In India: Evidence From The Cointegration And Rolling-Window Causality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(06), pages 1699-1725, December.
    14. DUMITRESCU Serju & AVRAM Marioara, 2012. "Views Regarding The Organization Of The Activities Relatedto The Prevention And Combat Against Money Laundering," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 0(4), pages 238-244.
    15. Jong Chan Lee & Yi Joong Won & Sang Young Jei, 2019. "Study of the Relationship between Government Expenditures and Economic Growth for China and Korea," Sustainability, MDPI, vol. 11(22), pages 1-11, November.
    16. MOSCALU Maricica, 2012. "Business Failure Prediction For Romanian Smes Using Multivariate Discriminant Analysis," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 0(4), pages 457-466.
    17. Ferdi Celikay, 2020. "Dimensions of tax burden: a review on OECD countries," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 25(49), pages 27-43, March.
    18. Trofimov, Ivan D., 2020. "The optimum size of public education spending: panel data evidence," MPRA Paper 106847, University Library of Munich, Germany.
    19. Nazila Alinaghi & W. Robert Reed, 2021. "Taxes and Economic Growth in OECD Countries: A Meta-analysis," Public Finance Review, , vol. 49(1), pages 3-40, January.
    20. Diagne, Youssoupha Sakrya & Sy, Hamat & Thiam, Dame, 2014. "Efficience des dépenses publiques au Sénégal [Public spending efficiency in Senegal]," MPRA Paper 113994, University Library of Munich, Germany.

    More about this item

    Keywords

    Fiscal Policy; Government Expenditure; Public Sector Efficiency; Growth;
    All these keywords.

    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, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osk:wpaper:1020. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The Economic Society of Osaka University (email available below). General contact details of provider: https://edirc.repec.org/data/feosujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.