Expenditure Efficiency and the Optimal Size of Government in Developing Countries

Yogi Rahmayanti and Theara Horn

No 10-20, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: Government efficiency plays a significant role in the relationship between government expenditure and economic growth. Based on panel data from 63 developing countries 1990 to 2003, we calculate efficiency scores using Data Envelopment Analysis, incorporate them into a simple model of growth with government expenditure. We find that there is a critical level of efficiency required for government expenditure to have positive effect on growth. Further, above a critical level of efficiency, greater efficiency lowers the optimal size of government expenditure required to maximize growth.

Keywords: Fiscal Policy; Government Expenditure; Public Sector Efficiency; Growth (search for similar items in EconPapers)
JEL-codes: E6 H50 O4 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2010-07
New Economics Papers: this item is included in nep-dev, nep-eff, nep-fdg and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www2.econ.osaka-u.ac.jp/library/global/dp/1020.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1020

Access Statistics for this paper

More papers in Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by The Economic Society of Osaka University ().