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Performance Measurement In Public Spending: Evidence From A Non-Parametric Approach

Author

Listed:
  • Yi-Chung Hsu

    (Department of Public Finance and Taxation, National Taichung University of Science and Technology, Taichung, Taiwan.)

  • Chien-Chiang Lee

    (Department of Finance, National Sun Yat-sen University, Kaohsiung, Taiwan, Corresponding author.)

Abstract

This paper employs the data envelopment analysis (DEA) method to evaluate the performance of public spending and to show how productivity has changed over time for 18 selected OECD countries during 1995 to 2002. Our analysis shows that 14 countries exhibit variable returns to scale, meaning that they could reduce technical inefficiency through internal scale economies. The patterns of changes in efficiency for the countries are further analyzed using the Malmquist productivity index approach. The result shows that total factor productivity is higher in the first sub-period, 1995- 1999, which could be attributed to the increased competition and internationalization of the banking system, which took place in this sub-period due to the accelerated liberalization and deregulation of the financial system. Finally, the Tobit model results of the random effects show that population density, energy production, and corruption have negative effects on efficiency scores, while energy use and creditor have positive effects on them.

Suggested Citation

  • Yi-Chung Hsu & Chien-Chiang Lee, 2014. "Performance Measurement In Public Spending: Evidence From A Non-Parametric Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 136-159, October.
    • Handle: RePEc:rjr:romjef:v::y:2014:i:3:p:136-159
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    References listed on IDEAS

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    Cited by:

    1. Muchen Luo & Yimin Wu, 2022. "Data-Driven Evaluation and Optimisation of Livelihood Improvement Efficiency," Sustainability, MDPI, vol. 14(13), pages 1-24, July.

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    More about this item

    Keywords

    public spending; data envelopment analysis; efficiency; productivity; OECD countries;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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