Articlehybrid2009

Sizing the government

155 citations0/0 files storedPublic Choice

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Efficiency Analysis Using DEA Fiscal Policies and Political Economy Fiscal Policy and Economic Growth

Abstract

Is there such a thing as an optimal government size? We investigate the so-called Armey curve, which claims an inverted U-shaped relationship between government size and economic performance, using non-parametric Data Envelopment Analysis (DEA). The DEA scores are linked to control variables, such as initial per capita income, openness, population density, urbanization, country size and family size. For 23 OECD-countries we estimate the country specific efficiency scores, which reveal the extent to which a country uses excess public resources to achieve the observed growth rate of GDP.

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References

1978Measuring the efficiency of decision making units 1984Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis 1989Economic Growth in a Cross Section of Countries 1990Government Spending in a Simple Model of Endogeneous Growth 1981A Rational Theory of the Size of Government 1971Bureaucracy and Representative Government 1996Why Do More Open Economies Have Bigger Governments?1967MACROECONOMICS OF UNBALANCED GROWTH: THE ANATOMY OF THE URBAN CRISES

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