Evaluation of Government Quality Impacts on the Efficiency of Government Size

The main purpose of this article is to evaluate the effectiveness of the government quality level on efficiency of its size. For that, at first, government quality based on Kaufman and others (2006) approach, has been categorized into four levels: Very good, good, poor and very poor. Then, a Cobb-Douglas production function has been estimated using the data period of 1986 tell 2012 and using the Autoregressive Distributed Lag (ARDL) method. The results show that, various levels of government quality have had different effects on economic growth and also on the efficiency of the government size. It means, when the government quality is very good, the economic growth will increase faster and under this condition, increasig the government size in long and short run, have more positive effect on economic growth. These findings reflect the need for paying more attention on planning for improvement of the government quality by relevant policies.