Abstract

This article estimates the effects of school expenditure on school performance in government secondary
schools in New South Wales, Australia over the period 2006–2010. It uses dynamic panel
analysis to exploit time series data on individual schools that only recently has become available. We
find a significant but small effect of expenditure on relative school performance and significant
dynamics in the school improvement process. In addition, our estimates support previous studies in
suggesting that the size of schools is an important factor in their performance. Regarding methods
for analysing school expenditure effects, this article argues the relevance of a dynamic specification
for the investigation of school performance and recommends a continuing research agenda using
panel data and dynamic models.