Cover of EconPol Working Paper 23

How “big” should government be?

António Afonso, Ludger Schuknecht

How big should government be? António Afonso and Ludger Schuknecht link the recent findings of Data Envelope Analysis on public expenditure to the size of government. Their analysis of government performance indicators in relation to public expenditure finds the biggest expenditure categories have the highest savings potential.

Abstract

We assess how “big” government should reasonably be in a number of advanced countries. First, we will link the recent findings of Data Envelope Analysis on efficient public expenditure with the question of the size of the government. Second, we report descriptive analysis of various government performance indicators in relation to public expenditure to provide indications of overall “optimal” across spending categories. In principle, the highest savings potential is in the biggest expenditure categories, public consumption and social expenditure.
 

Citation

António Afonso and Ludger Schuknecht, How “big” should government be?, EconPol Working Papers 23, March 2019.