Title: Public sector's productivity and macroeconomic performance: the case of the Italian public administration reform

Authors: Lorenzo Carbonari; Ernesto L. Felli; Massimo Gerli; Giovanni Tria

Addresses: Università di Roma 'Tor Vergata', DEF and CEIS, Via Columbia 2 – 00133 Rome, Italy ' Università di Roma III, School of Law, Via Ostiense 163 – 00154 Rome, Italy ' The Office of Prime Minister of Italian Government and SSPA, Via dei Robilant 11 – 00135 Rome, Italy ' Università di Roma 'Tor Vergata', DEDI and SSPA, Via dei Robilant 11 – 00135 Rome, Italy

Abstract: The present research is concerned with estimating the macroeconomic effects on the Italian economy of an increase in the productivity of government activities triggered by the full implementation of the recent structural reform of public administration. There are several levers through which an increase in public sector's productivity may affect the drivers of economic growth: increases in overall productivity, reductions in transaction costs, externalities. We employ a structural macroeconometric model of the Italian economy to analyse how a more productive public sector - whose performance we measure through a novel set of indicators - can positively affect the aggregate economic activity. Two main results emerge. First, a conceivable shock that improves the public sector's efficiency (i.e., a one-time 10% increase) significantly enhances the size and the pace of overall output. Second, and more notable, we find that even the long-run rate of growth of GDP is permanently increased.

Keywords: public administration reform; productivity; simulation; Italy; public sector productivity; macroeconomic performance; economic growth; macroeconometric modelling.

DOI: 10.1504/IJPP.2013.056575

International Journal of Public Policy, 2013 Vol.9 No.4/5/6, pp.306 - 334

Received: 18 Feb 2012
Accepted: 26 Nov 2012

Published online: 27 Sep 2013 *

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