Optimum Resource Allocation in U.S. Agriculture: Reply

Relative political capacity: A dataset to evaluate the performance of nations, 1960–2018

“…β coefficients) for the cross-sectional sample per year. To reach allocative efficiency, in principle, the government should adjust its spending composition in a way where the factor shares of each of the government's functional outlays equal the elasticities (Tyner and Tweeten, 1977). Therefore, the government can improve its economic performance by adopting an alternative fiscal policy strategy that increases public sector expenditure with higher β coefficients while limiting public spending on other sectors with lower βs.…”

“…β coefficients) for the cross-sectional sample per year. To reach allocative efficiency, in principle, the government should adjust its spending composition in a way where the factor shares of each of the government's functional outlays equal the elasticities (Tyner and Tweeten, 1977). Therefore, the government can improve its economic performance by adopting an alternative fiscal policy strategy that increases public sector expenditure with higher β coefficients while limiting public spending on other sectors with lower β s. Built upon the estimates as the benchmark showing which public spending items boost potential production while others lower it, we construct an “allocative inefficiency score” for each country by summing up the distances between the actual and optimal spending ratios for four government functional outlays.…”