Pamphlet Series
No. 48

International Monetary Fund
Washington, D.C.

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ISSN 0538-8759
ISBN 1-55775-497-7

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




Unproductive Expenditures and Their Economic Implications
    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
        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
    Public Expenditures and Economic Growth
    Public Investment and Economic Growth

Conclusions and Some Pragmatic Suggestions for Policy Formulation
    Some Pragmatic Suggestions for Policy Formulation

Appendix: Patterns of Government Expenditure by Country Groups

Appendix Tables


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.