Pamphlet Series
No. 48
1995
International Monetary Fund
Washington, D.C.
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ISSN 0538-8759
ISBN 1-55775-497-7
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Unproductive Public Expenditures
A Pragmatic Approach To Policy Analysis
Fiscal Affairs Department
International Monetary Fund
Prepared by Ke-young Chu, Sanjeev Gupta, Benedict Clements, Daniel Hewitt, Sergio Lugaresi, Jerald Schiff, Ludger Schuknecht, and Gerd Schwartz
Contents
Preface
Introduction
Unproductive Expenditures and Their Economic Implications
Background
Public Expenditure Productivity and Unproductive Expenditures
Analytical framework
Unproductive expenditures and their underlying factors
Conceptual and practical difficulties
Implications of Unproductive Expenditures
Public Expenditure Productivity: Illustrative Analyses
Overview of an Approach
Cost-effectiveness
Appropriate mix of outputs and level of aggregate expenditure
Output mix, expenditure composition, and value judgments
Institutional and political considerations
Importance of data
Analyses of Economic Components
Public sector employment and wages
Subsidies and transfers
Public investment
Analyses of Functional Components
Nutrition, health, and education
Military expenditure
Empirical Evidence on Public Expenditures and Economic Growth
Overview
Public Expenditures and Economic Growth
Public Investment and Economic Growth
Conclusions and Some Pragmatic Suggestions for Policy Formulation
Conclusions
Some Pragmatic Suggestions for Policy Formulation
Appendix: Patterns of Government Expenditure by Country Groups
Appendix Tables
References
The opinions expressed in the pamphlet are those of the authors and should not be attributed to the Executive Directors of the International Monetary Fund or their national authorities.
The term "country," as used in this pamphlet, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
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