UTL Repository >
ISEG - Instituto Superior de Economia e Gestão / ISEG - School of Economics & Management Lisbon >
Departamento de Economia / Department of Economics >
DE - Documentos de trabalho / Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/2132

Title: Excess burden and the cost of inefficiency in public services provision
Authors: Afonso, António
Gaspar, Vítor
Keywords: Government efficiency
excess burden
taxes
spending
Issue Date: Apr-2006
Publisher: European Central Bank
Citation: Afonso, António e Vítor Gaspar. 2006. "Excess burden and the cost of inefficiency in public services provision". European Central Bank working paper series nº 601-2006
Series/Report no.: European Central Bank working paper series;nº 601-2006
Abstract: In this paper we revisit the literature on the economic consequences from inefficiency in public services provision. Following Dupuit (1844) and Pigou (1947) we argue that it is important to take the financing side explicitly into account. The fact that public expenditure financing must rely on distortional taxation implies that both direct and indirect costs are relevant when estimating the economic impacts of inefficiency in public services provision. Using Hicks' compensating variation (following Diamond and McFadden (1974) and Auerbach (1985)) we show that these magnification mechanisms are not only conceptually relevant, they are also important from a quantitative point of view. Specifically, we rely on a range of estimates of public sector efficiency (from Afonso, Schuknecht and Tanzi (2005, 2006)) to illustrate numerically that the relative importance of indirect costs of public sector provision inefficiency, linked to financing through distortional taxation increases with the magnitude of the inefficiency.
URI: http://hdl.handle.net/10400.5/2132
ISSN: 1725-2806
Publisher version: http://www.ecb.int/pub/pdf/scpwps/ecbwp601.pdf
Appears in Collections:DE - Documentos de trabalho / Working Papers

Files in This Item:

File Description SizeFormat
ecbwp601.pdf703.33 kBAdobe PDFView/Open
Statistics
FacebookTwitterDeliciousLinkedInDiggGoogle BookmarksMySpaceOrkut
Formato BibTex mendeley Endnote Logotipo do DeGóis 

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.

 

 
Estamos no RCAAP Governo Português separator Ministério da Educação e Ciência   Fundação para a Ciência e a Tecnologia

Financiado por:

POS_C UE