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Sizing the Government

  • De Witte, Kristof
  • Moesen, Wim

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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File URL: http://mpra.ub.uni-muenchen.de/14785/1/MPRA_paper_14785.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14785.

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Date of creation: 22 Apr 2009
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Handle: RePEc:pra:mprapa:14785
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  1. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
  2. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
  3. CREMER, Helmuth & DELLIS, Arnaud & PESTIEAU, Pierre, . "Family size and optimal income taxation," CORE Discussion Papers RP -1603, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
  5. Afonso, António & Schuknecht, Ludger & Tanzi, Vito, 2006. "Public sector efficiency: evidence for new EU member states and emerging markets," Working Paper Series 0581, European Central Bank.
  6. Oded Galor & David N. Weil, 1993. "The Gender Gap, Fertility, and Growth," NBER Working Papers 4550, National Bureau of Economic Research, Inc.
  7. Sanjeev Gupta & Luc Leruth & Luiz de Mello & Shamit Chakravarti, 2003. "Transition Economies: How Appropriate is the Size and Scope of Government?," Comparative Economic Studies, Palgrave Macmillan, vol. 45(4), pages 554-576, December.
  8. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
  9. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  10. Afonso, António & Furceri, Davide, 2008. "Government size, composition, volatility and economic growth," Working Paper Series 0849, European Central Bank.
  11. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  12. Tupper, Henrique Cesar & Resende, Marcelo, 2004. "Efficiency and regulatory issues in the Brazilian water and sewage sector: an empirical study," Utilities Policy, Elsevier, vol. 12(1), pages 29-40, March.
  13. Joel Slemrod, 1995. "Involvement, Prosperity, and Economic Growth?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 373-431.
  14. Scully, Gerald W, 2001. " Government Expenditure and Quality of Life," Public Choice, Springer, vol. 108(1-2), pages 123-45, July.
  15. António Afonso & Ludger Schuknecht & Vito Tanzi, 2005. "Public sector efficiency: An international comparison," Public Choice, Springer, vol. 123(3), pages 321-347, June.
  16. Johannah Branson & C. Lovell, 2001. "A Growth Maximising Tax Structure for New Zealand," International Tax and Public Finance, Springer, vol. 8(2), pages 129-146, March.
  17. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  18. Katsimi, Margarita, 1998. " Explaining the Size of the Public Sector," Public Choice, Springer, vol. 96(1-2), pages 117-44, July.
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