Public sector efficiency: Leveling the playing field between OECD countries

Adam, Antonis and Delis, Manthos D and Kammas, Pantelis (2008): Public sector efficiency: Leveling the playing field between OECD countries.

Abstract

In this paper we seek a robust methodology to measure the relative public spending efficiency of 19 OECD countries over the period 1980-2000. Based on the functional classification of government expenditure, we decompose total public spending into its separate accounts and we employ a semi-parametric method to obtain relative efficiency scores (for the separate accounts as well as for aggregate public spending). The econometric method isolates the impact of government inefficiency from the inefficiency arising from the socioeconomic environment or luck, thus leveling the playing field between the examined countries. The results suggest that the quality of governance is more important than the socioeconomic environment or luck. Finally, we propose a technique to measure the allocative efficiency of public spending, in an effort to proxy the optimal allocation of public funds when the governments set specific targets.

• Item Type: MPRA Paper
• Language: English
• Keywords: Public spending; Technical and allocative efficiency; Stochastic DEA
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C14 - Semiparametric and Nonparametric Methods: General

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