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Public and private inputs in aggregate production and growth: a cross-country efficiency approach

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  • Afonso, António
  • St. Aubyn, Miguel

Abstract

In a cross section of OECD countries we replace the macroeconomic production function by a production possibility frontier, TFP being the composite effect of efficiency scores and possibility frontier changes. We consider, for the periods 1970, 1980, 1990, 2000, one output: GDP per worker; three inputs: human capital, public physical capital per worker and private physical capital per worker. We use a semiparametric analysis, computing Malmquist productivity indexes, and we also resort to stochastic frontier analysis. Results show that private capital is important for growth, although public and human capital also contribute positively. A governance indicator, a non-discretionary input, explains inefficiency. Better governance helps countries to achieve a better performance. Non-parametric and parametric results coincide rather closely on the countries movements vis-à-vis the possibility frontier, and on their relative distances to the frontier. JEL Classification: C14, D24, H50, O47

Suggested Citation

  • Afonso, António & St. Aubyn, Miguel, 2010. "Public and private inputs in aggregate production and growth: a cross-country efficiency approach," Working Paper Series 1154, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20101154
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    References listed on IDEAS

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    1. António Afonso & Miguel St. Aubyn, 2009. "Macroeconomic Rates Of Return Of Public And Private Investment: Crowding-In And Crowding-Out Effects," Manchester School, University of Manchester, vol. 77(s1), pages 21-39, September.
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    Cited by:

    1. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2013. "Does cutting back the public sector improve efficiency? Some evidence from 15 European countries," CEIS Research Paper 274, Tor Vergata University, CEIS, revised 30 Apr 2013.
    2. repec:wfo:monber:y:2017:i:9:p:677-699 is not listed on IDEAS
    3. António AFONSO, & Mohamed AYADI, & Sourour RAMZI, 2013. "Assessing productivity performance of basic and secondary education in Tunisia: a Malmquist analysis," Working Papers Department of Economics 2013/19, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    4. Sara Barcenilla-Visús & José-María Gómez-Sancho & Carmen López-Pueyo & María-Jesús Mancebón & Jaime Sanaú, 2013. "Technical Change, Efficiency Change and Institutions: Empirical Evidence for a Sample of OECD Countries," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 207-227, June.
    5. Catarina Moura e Sa Cardoso & Geetha Ravishankar, 2015. "Productivity growth and convergence: a stochastic frontier analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 42(2), pages 224-236, May.
    6. José Afonso Mendes & Sandra T. Silva & Ester G. Silva, 2014. "Portuguese economic growth revisited: a technology-gap explanation," FEP Working Papers 545, Universidade do Porto, Faculdade de Economia do Porto.
    7. Deng, Zhongqi & Song, Shunfeng & Chen, Yongjun, 2016. "Private participation in infrastructure project and its impact on the project cost," China Economic Review, Elsevier, vol. 39(C), pages 63-76.

    More about this item

    Keywords

    Economic Growth; Efficiency; Malmquist index; public spending;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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