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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References listed on IDEAS
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1186, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
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Working Papers Department of Economics
2006/01, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
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- 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.
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