Quality of Government and Living Standards
It is generally acknowledged that a governmentâ€™s output is difficult to define and its value is hard to measure. The practical solution adopted by national accounts systems is to equate output value to input costs, but well-documented inefficiencies in government activities make this approximation questionable. One solution is to purge from gross domestic product (GDP) the fraction of government inputs that is wasted. This note illustrates such a correction, computing corrected per capita GDP on the basis of two studies that estimate efficiency scores for several dimensions of government activities. Results show that the correction could be significant and reorder the rankings of living standards.
Volume (Year): (2012)
Issue (Month): 89 (September)
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- Angus Deaton & Alan Heston, 2008.
"Understanding PPPs and PPP-based national accounts,"
NBER Working Papers
14499, National Bureau of Economic Research, Inc.
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- Angus Deaton & Alan Heston, 2009. "Understanding PPPs and PPP-based national accounts," Working Papers 1186, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
- Angus Deaton & Alan Heston, 2008. "Understanding PPPs and PPP-based national accounts," Working Papers 1120, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
- Antonio Afonso & Ludger Schuknecht & Vito Tanzi, 2010.
"Public sector efficiency: evidence for new EU member states and emerging markets,"
Taylor & Francis Journals, vol. 42(17), pages 2147-2164.
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- António Afonso & Ludger Schuknecht & Vito Tanzi, 2006. "Public Sector Efficiency: Evidence for New EU Member States and Emerging Markets," Working Papers Department of Economics 2006/01, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Rajkumar, Andrew Sunil & Swaroop, Vinaya, 2008. "Public spending and outcomes: Does governance matter?," Journal of Development Economics, Elsevier, vol. 86(1), pages 96-111, April.
- Michael Kremer & Nazmul Chaudhury & F. Halsey Rogers & Karthik Muralidharan & Jeffrey Hammer, 2005. "Teacher Absence in India: A Snapshot," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 658-667, 04/05.
- Nazmul Chaudhury & Jeffrey S. Hammer, 2004. "Ghost Doctors: Absenteeism in Rural Bangladeshi Health Facilities," World Bank Economic Review, World Bank Group, vol. 18(3), pages 423-441.
- Francesco Grigoli & Eduardo Ley, 2012. "Quality of Government and Living Standards; Adjusting for the Efficiency of Public Spending," IMF Working Papers 12/182, International Monetary Fund.
- Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
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