Public Sector Efficiency: An International Comparison

Posted: 11 Aug 2005

See all articles by António Afonso

António Afonso

University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Ludger Schuknecht

European Central Bank (ECB)

Vito Tanzi

International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

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Abstract

We compute public sector performance (PSP) and efficiency (PSE)indicators, comprising a composite and seven sub-indicators, for 23 industrialised countries. The first four sub-indicators are "opportunity" indicators that take into account administrative, education and health outcomes and the quality of public infrastructure and that support the rule of law and a level playing-field in a market economy. Three other indicators reflect the standard "Musgravian" tasks for government: allocation, distribution, and stabilisation. The input and output efficiency of public sectors across countries is then measured via a non-parametric production frontier technique. The study finds significant differences in public sector performance and efficiency, which suggests a large potential for expenditure savings in many countries.

Keywords: Government expenditure, efficiency, free disposable hull, production possibility frontier

JEL Classification: C14, H50

Suggested Citation

Afonso, António and Schuknecht, Ludger and Tanzi, Vito, Public Sector Efficiency: An International Comparison. Public Choice, Vol. 123, No. 3-4, pp. 321-347, January 2005 , Available at SSRN: https://ssrn.com/abstract=701123

António Afonso (Contact Author)

University of Lisbon - ISEG (School of Economics and Management) ( email )

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ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

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Ludger Schuknecht

European Central Bank (ECB) ( email )

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Vito Tanzi

International Monetary Fund (IMF) ( email )

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National Bureau of Economic Research (NBER)

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