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Public sector efficiency: Leveling the playing field between OECD countries

  • Adam, Antonis
  • Delis, Manthos D
  • Kammas, Pantelis

In this paper we seek a robust methodology to measure the relative public spending efficiency of 19 OECD countries over the period 1980-2000. Based on the functional classification of government expenditure, we decompose total public spending into its separate accounts and we employ a semi-parametric method to obtain relative efficiency scores (for the separate accounts as well as for aggregate public spending). The econometric method isolates the impact of government inefficiency from the inefficiency arising from the socioeconomic environment or luck, thus leveling the playing field between the examined countries. The results suggest that the quality of governance is more important than the socioeconomic environment or luck. Finally, we propose a technique to measure the allocative efficiency of public spending, in an effort to proxy the optimal allocation of public funds when the governments set specific targets.

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File URL: http://mpra.ub.uni-muenchen.de/16493/1/MPRA_paper_16493.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16493.

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Date of creation: 18 Dec 2008
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Handle: RePEc:pra:mprapa:16493
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  16. António Afonso & Ludger Schuknecht & Vito Tanzi, 2005. "Public sector efficiency: An international comparison," Public Choice, Springer, vol. 123(3), pages 321-347, June.
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