Coordinating Audit Functions in the European Union
Edited by Milagros Garciá Crespo
Chapter 1: Public control: a general view
Milagros García Crespo EFFECTIVENESS AND EFFICIENCY IN ECONOMIC THEORY The study of the economic activity of the State is one of the classic ﬁelds of reﬂection in economic theory. This reﬂection has known diﬀerent historical phases according to the economic paradigm prevalent at the time. Authors following the neoclassical approach have explained the origin of the State functions taking as a starting point the solution oﬀered by the theorems of welfare economy. Thus the theory of market failures became the main reference in the study of the economic activity of the State. This theory has subsequently seen its analysis enriched with the incorporation of new concepts derived from the observed information diﬃculties encountered by economic agents when they try to optimize their decisions. The hypothesis of perfect information has been nuanced in response to the existence of information asymmetries and thus an important new ﬁeld of reﬂection has been opened up, described by Stiglitz (1994) as a new paradigm, the ‘paradigm of information’, as opposed to the ‘neoclassical paradigm’ represented by the welfare economy. Accepted or not as a new paradigm, acknowledgement of the existence of information deﬁciencies has enlarged in new directions the neoclassical ﬁeld of research on the State functions. Nevertheless, the novelty is not as radical as the words of Stiglitz would make us believe. During the ﬁrst third of the last century, institutional economics had already explored some of the areas of study that follow from the assumption...
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