How does public spending affect technical efficiency? Some evidence from 15 European countries

Sabrina Auci, Manuela Coromaldi, Laura Castellucci

Risultato della ricerca: Articlepeer review

2 Citazioni (Scopus)

Abstract

The relationship between government size and economic growth has been widely debated. Revisiting the subject from a distinct angle with respect to the mainstream approach, we provide an empirical analysis of the impact of government size on technical efficiency. The aim of this paper is to estimate the impact of public sector's size and of public expenditure components on 15 European countries’ technical efficiency from 1996 to 2014 by using a True Random Effect model. Using the total public expenditure as a proxy for the government size we estimate simultaneously national optimal production function and technical efficiency by controlling for income distribution and institutional quality. Our main findings show that the effect of public sector's size on efficiency is positive while the type of public expenditures may have both positive and negative impact. In more details, results suggest that education and health expenditures have a positive effect on technical efficiency, while others have a negative impact.
Lingua originaleEnglish
pagine (da-a)1-23
Numero di pagine23
RivistaBulletin of Economic Research
Volume73
Stato di pubblicazionePublished - 2020

All Science Journal Classification (ASJC) codes

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