Government spending in Italy – inefficiency vs. corruption

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What determines how efficiently a certain public service is provided? The authors of CEPR DP6799 use a dataset of procurement prices paid by Italian public bodies to disentangle the effect of active waste (overpricing that benefits the decision-maker directly, like bribing) and passive waste (overpricing due to sheer inefficiency). The results indicate that passive waste accounts for 83% of the total estimated waste.

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