The Macroeconomic Impact of Privatization
AbstractPrivatization programs can generate substantial sums. This paper argues that, as a general rule, the proceeds of privatization should be treated as financing (and so put "below the line") and not as revenue. Unlike taxation, privatization never reduces private sector wealth. In exceptional cases, it may reduce the propensity to invest, and depress aggregate demand as a tax increase would. Given the difficulty of predicting when this will occur, and its exceptional nature, the receipt of proceeds from privatization does not, in most cases, warrant a relaxation of the stance of fiscal policy to maintain aggregate demand.
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.
Volume (Year): 45 (1998)
Issue (Month): 2 (June)
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Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
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