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Sizing the government

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  • Kristof Witte

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  • Wim Moesen

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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Suggested Citation

  • Kristof Witte & Wim Moesen, 2010. "Sizing the government," Public Choice, Springer, vol. 145(1), pages 39-55, October.
  • Handle: RePEc:kap:pubcho:v:145:y:2010:i:1:p:39-55 DOI: 10.1007/s11127-009-9527-7
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    2. Petr Zimčík, 2016. "Velikost veřejného sektoru a ekonomický růst
      [The Scope of Government and Economic Growth]
      ," Politická ekonomie, University of Economics, Prague, vol. 2016(4), pages 439-450.
    3. Huguenin, Jean-Marc, 2015. "Adjusting for the environment in DEA: A comparison of alternative models based on empirical data," Socio-Economic Planning Sciences, Elsevier, vol. 52(C), pages 41-54.
    4. Cambini, Carlo & Croce, Annalisa & Fumagalli, Elena, 2014. "Output-based incentive regulation in electricity distribution: Evidence from Italy," Energy Economics, Elsevier, vol. 45(C), pages 205-216.
    5. J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
    6. Gabriel Villa & Sebastián Lozano, 2016. "DEA with non-monotonic variables. Application to EU governments’ macroeconomic efficiency," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(12), pages 1510-1523, December.
    7. Robert Pater & Tomasz Skica, 2014. "The productivity of public and private sector in Poland," Business and Economic Horizons (BEH), Prague Development Center, vol. 10(2), pages 120-137, July.
    8. Alfred Wu & Mi Lin, 2012. "Determinants of government size: evidence from China," Public Choice, Springer, vol. 151(1), pages 255-270, April.
    9. Tommaso Agasisti & Giuseppe Munda, 2017. "Efficiency of investment in compulsory education: An Overview of Methodological Approaches," JRC Working Papers JRC106681, Joint Research Centre (Seville site).
    10. Muraközy, László, 2011. "Összefonódó költségvetési kihívások a 21. század Európájában
      [Interlocking budget challenges in 21st century Europe]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 592-618.
    11. 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.
    12. Hajamini, Mehdi & Falahi, Mohammad Ali, 2012. "Economic growth and the optimum size of government in 15 European countries: A threshold panel approach," MPRA Paper 39616, University Library of Munich, Germany.
    13. 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.

    More about this item

    Keywords

    Data envelopment analysis; Government size; Public sector performance; Armey-curve; H10; H21; H31;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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