Efficiency of Local Government Spending: Evidence for the Lisbon Region

32 Pages Posted: 20 Nov 2003

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

Sónia Fernandes

Technical University of Lisbon

Date Written: July 2003

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

JEL Classification: C14, H72

Suggested Citation

Afonso, António and Fernandes, Sónia, Efficiency of Local Government Spending: Evidence for the Lisbon Region (July 2003). Available at SSRN: https://ssrn.com/abstract=470481 or http://dx.doi.org/10.2139/ssrn.470481

António Afonso (Contact Author)

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

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal
+351 21 392 5985 (Phone)
+351 21 396 6407 (Fax)

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

UECE (Research Unit on Complexity and Economics)

Rua Miguel Lupi 20
Lisbon, 1249-078
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

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

Sónia Fernandes

Technical University of Lisbon ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

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