Does public sector efficiency matter? Revisiting the relation between fiscal size and economic growth in a world sample

Konstantinos Angelopoulos (), Apostolis Philippopoulos and Mike Tsionas

Working Papers from Business School - Economics, University of Glasgow

Abstract: This paper revisits the relationship between fiscal size and economic growth. Our work differs from the empirical growth literature because this relationship depends explicitly on the efficiency of the public sector. We use a sample of 64 countries, both developed and developing, in four 5-year time-periods over 1980-2000. Building on the work of Afonso, Schuknecht and Tanzi (2005), we construct a measure of public sector efficiency in each country and each time-period by calculating an output to input ratio. In addition, we get an estimate of technical efficiency of public spending for 52 countries for the time-period 1995-2000 by employing a stochastic frontier analysis. Using these two measures, we find evidence of a non-monotonic relation between fiscal size and economic growth that depends critically on government efficiency.

Keywords: Fiscal policy; government efficiency; growth (search for similar items in EconPapers)
JEL-codes: E6 H1 (search for similar items in EconPapers)
Date: 2007-09
New Economics Papers: this item is included in nep-eff, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Journal Article: Does public sector efficiency matter? Revisiting the relation between fiscal size and economic growth in a world sample (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2007_30

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