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Public Expenditure Control in Europe

Coordinating Audit Functions in the European Union

Edited by Milagros Garciá Crespo

This book presents a comprehensive analysis of public expenditure control in Europe and the coordination strategies available. It provides a detailed scrutiny of the various audit systems in the EU and the difficulties in building consistency or harmony between them. The book demonstrates how successful strategies should aim to strengthen the collaboration between different layers of government at the EU, national and regional levels.
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Chapter 1: Public control: a general view

Milagros García Crespo


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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