Assessing Public Spending Efficiency in 20 OECD Countries

ISEG Economics Department Working Paper No. WP 12/2016/DE/UECE

41 Pages Posted: 1 Jul 2016

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

Mina Kazemi

University of Lisbon - ISEG School of Economics and Management

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Date Written: June 1, 2016

Abstract

This study follows the framework of Afonso, Schuknecht, and Tanzi (2005), aiming to look at the public expenditure of 20 OECD countries for the period 2009-2013, from the per-spective of efficiency and assess if these developed countries are performing efficiently compared to each other. Public Sector Performance (PSP) and Public Sector Efficiency (PSE) indicators were constructed and Data Envelopment Analysis was conducted. The results show that the only country that performed on the efficiency frontier is Switzerland. The average input-oriented efficiency score is equal to 0.732. That is, on average countries could have reduced the level of public expenditure by 26.8% and still achieved the same level of public performance. The average output-oriented efficiency score is 0.769 denoting that on average the sample countries could have increased their performance by 23.1% by employing the same level of public expenditure.

Keywords: Public Spending, Technical Efficiency, Public Sector Performance, Data Envelopment Analysis

JEL Classification: C14, C87, H40, H50, Y10

Suggested Citation

Afonso, António and Kazemi, Mina, Assessing Public Spending Efficiency in 20 OECD Countries (June 1, 2016). ISEG Economics Department Working Paper No. WP 12/2016/DE/UECE, Available at SSRN: https://ssrn.com/abstract=2787817 or http://dx.doi.org/10.2139/ssrn.2787817

António Afonso (Contact Author)

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

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal
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+351 21 396 6407 (Fax)

HOME PAGE: http://https://www.iseg.ulisboa.pt/aquila/homepage/aafonso

UECE (Research Unit on Complexity and Economics)

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Lisbon, 1249-078
Portugal
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HOME PAGE: http://https://uece.rc.iseg.ulisboa.pt/

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

Rua do Quelhas 6
LISBOA, 1200-781
Portugal

Mina Kazemi

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

R. Miguel Lupi 20
Lisbon, 1249-078
Portugal

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