Efficiency of Local Government Spending: Evidence for the Lisbon Region

Antonio Afonso and Sónia Fernandes

No 2003/09, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: In this paper we measure and analyse expenditure efficiency of Portuguese local governments using a non-parametric technique for production frontier estimation known as Free Disposal Hull. We first construct an index of municipal performance and then compute input and output efficiency scores for 51 Portuguese municipalities located in the region of Lisbon and Vale do Tejo (RLVT) in order to estimate the extent of municipal spending that seems to be 'wasted' relative to the 'best-practice' frontier. The results of our empirical analysis suggest that RLVT municipalities could achieve, on average, roughly the same level of local output with about 39 percent fewer resources, i.e. local performance could be improved without necessarily increasing municipal spending.

Keywords: municipal expenditure; efficiency; production possibility frontier; FDH (search for similar items in EconPapers)
JEL-codes: C14 H72 (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-eec, nep-pbe and nep-ure
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp92003

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