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On the Optimal Government Size in Europe: Theory and Empirical Evidence

Georgios Karras ()

The Manchester School of Economic & Social Studies, 1997, vol. 65, issue 3, 280-94

Abstract: This paper extimates the optimal government size for the representative European country by investigating the role of public services in the production process. The empirical results support the following conclusions: (1) government services are significantly productive; (2) there is no evidence that government services (on average) are not optimally provided; (3) the optimal government size is 16 percent (+/- 3 percent) for the average International Comparison Program European country; and (4) the marginal productivity of government services may be negatively related to government size. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1997
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Handle: RePEc:bla:manch2:v:65:y:1997:i:3:p:280-94