Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/308383 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11487
Publisher: 
CESifo GmbH, Munich
Abstract: 
We examine the relationship between public sector efficiency and government spending, to assess public resource management across the 27 European Union countries. Specifically, we analyze the growth of public expenditure in relation to outcomes across various public sector performance (PSP) indicators. We compute government spending efficiency using Data Envelopment Analysis (DEA) to subsequently assess the relationship between efficiency and the growth rate of public expenditure. Our findings suggest that higher efficiency can be achieved without proportionally increasing public spending, both in total expenditure and in specific areas such as social protection, economic affairs, education, healthcare, and public services. Indeed, with overall output efficiency scores between 0.77 and 0.87, with the same level of inputs, output could increase around 13%-23%. Additionally, public spending tends to rise during recessions, while it decreases with higher levels of human capital and redistribution indicators. Finally, more efficient countries tend to coalesce around Austria, Croatia, Denmark, France, Greece, Hungary, Poland, and Sweden.
Subjects: 
public sector performance indicators
efficiency
public expenditure
functions of the government
data envelopment analysis
JEL: 
C33
C61
E62
H11
H50
O47
P43
Document Type: 
Working Paper
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