Public sector efficiency in the design of a COVID fund for the euro area

Oluwanbepelumi Esther Olanubi and Sijuola Olanubi

Research in Economics, 2022, vol. 76, issue 3, 163-169

Abstract: This study examines the importance of incorporating public sector efficiency considerations in the design of a “COVID Fund” in the euro area, aimed at providing insurance for member states against common health shocks. To test our proposition, we examine the efficiency of government spending on health during periods of severe resource constraints, which mirrors what occurs during pandemics like COVID-19. Specifically, we considered 19 administrations in the euro area during the global financial crisis and euro area sovereign debt crisis that followed. The results support our proposition. First, they reveal the average efficiency for all 19 administrations to be 0.950, which implies that member countries had wasted about 5% of funds allocated to health during this period. This suggests the need for the supranational institution to first of all ensure improvements in the use of public funds allocated to health by national governments in order to prevent wastage of the financial aid transferred to them during pandemics. Also, two of the four administrations that adopted the Economic and Financial Adjustment Programme of the troika (Portugal and Greece) during the twin crisis were among the most efficient. This suggest that making conditionalities an integral part of the central coordination of health funds during pandemics will result in improvements in the efficiency of funds transferred to member states.

Keywords: Public Sector Efficiency; Covid-19; Centrally Coordinated Health Fund; COVID Fund; Euro Area (search for similar items in EconPapers)
JEL-codes: E61 F42 H51 H87 I10 I18 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:76:y:2022:i:3:p:163-169

DOI: 10.1016/j.rie.2022.07.004

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