In the last decades, one of the most characteristic features in the developed economies has been the growing role of government. In this study, we focus on the Great Moderation period of the OECD countries. Targeting a more subtle approach to the role of the modern state, we shall here analyse not only the size of governmental expenditures, but also the performance and efficiency achieved. Taking the findings of the professional literature into account, we divided the developed countries into five groups, four from Europe, plus the overseas OECD countries. We shall examine what is the optimal size of the public sector for these groups from the point of view of economic growth and compare these results with the real figures.
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Afonso, António — Schuknecht, Ludger — Tanzi, Vito (2006): Public Sector Efficiency. Evidence for New EU Member States and Emerging Markets. ECB Working Paper Series, No. 581. Frankfurt: European Central Bank.
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Grubel H.How to Use the Fiscal Surplus? What is the Optimal Size of Government?1988)| false