THE OPTIMAL GOVERNMENT SIZE IN TRANSITION COUNTRIES


GÜNALP B., Dincer O.

PROGRESS IN ECONOMICS RESEARCH, VOL 15, vol.15, pp.153-169, 2010 (SSCI) identifier

  • Publication Type: Article / Article
  • Volume: 15
  • Publication Date: 2010
  • Journal Name: PROGRESS IN ECONOMICS RESEARCH, VOL 15
  • Journal Indexes: Social Sciences Citation Index (SSCI)
  • Page Numbers: pp.153-169
  • Hacettepe University Affiliated: Yes

Abstract

We estimate the productivity of government services and the optimal government size for a set of transition countries by employing the empirical methodology developed by Karras (1996, 1997) which is based on the theoretical framework developed by Barro (1989, 1990). Using annual data from 1990 to 2001 for 20 transition countries, we find empirical evidence supporting the hypotheses that government services are productive, they are, on average, optimally provided, and the marginal productivity of government services is negatively related to government size. In different specifications, the optimal government size is estimated to range between 14.1 percent and 18.2 percent for the average transition country.