Uncovering the Dimensions of the Common Good - Problems of Measurement of the Size of the Public Sector
There are problems in the measures of the size of the public sector both from the perspective of welfare state policies, monetary policy and the analysis of the economic role of public sector in general. In practice there are several different measures (e.g. total tax rate, total government expenditures /GDP, government value added/GDP, public consumption plus investments/ GDP). These give quite different values of the size of the government, and the ranking of countries in international comparisons changes depending on what measure is used. In closer inspection it appears that very few indicators are internationally comparable. For example the meaning of the total tax rate differs depending on the tax system in a country. Some countries tax income transfers and some others do not. It is, therefore, not easy to get comparable information about the net financial burden of the welfare state. In monetary policy the size of the public sector has become important because of the EMU criteria. The indebtedness of the government (debt/GDP) as an EMU criterion is defined on the basis of gross debt. Countries have, however, in different extent loan receivables. Therefore countries position with respect to EMU-criteria might change if net debt would be used as a measure of indebtedness. The paper analyses the size of the public sector from several different perspectives. Since it is difficult to get a holistic idea about the size of the public sector, it is recommended that in the connection of national accounts a special satellite system should be developed in order to better serve different analytical purposes where the size of the public sector in the economy is needed.
|Date of creation:||23 Dec 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Arkadiankatu 7, P.O. Box 1279, FI-00101 Helsinki|
Phone: +358 295 519 400
Fax: +358 295 519 599
Web page: http://www.vatt.fi/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stiglitz, Joseph E., 2002. "New perspectives on public finance: recent achievements and future challenges," Journal of Public Economics, Elsevier, vol. 86(3), pages 341-360, December.
- Robert E. Lucas Jr., 2003. "Macroeconomic Priorities," American Economic Review, American Economic Association, vol. 93(1), pages 1-14, March.
- Koskela, Erkki & Viren, Matti, 2003. "Government Size and Output Volatility: New International Evidence," Discussion Papers 857, The Research Institute of the Finnish Economy.
- Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, June.
When requesting a correction, please mention this item's handle: RePEc:fer:dpaper:322. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anita Niskanen)
If references are entirely missing, you can add them using this form.