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The Macroeconomic Impact of Privatization

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  • G. A. Mackenzie

    (International Monetary Fund)

Abstract

Privatization 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 Info

Article provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.

Volume (Year): 45 (1998)
Issue (Month): 2 (June)
Pages: 363-373

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Handle: RePEc:pal:imfstp:v:45:y:1998:i:2:p:363-373

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Cited by:
  1. Emanuele Bacchiocchi & Massimo Florio & Mara Grasseni, 2005. "The missing shock: the macroeconomic impact of British Privatizations," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 37(14), pages 1585-1596.
  2. Máximo Torero & Lorena Alcazar & Eduardo Nakasone, 2007. "El suministro de servicios públicos y bienestar social para los pobres. Aprendizaje de la privatización incompleta del sector eléctrico en Perú," Research Department Publications, Inter-American Development Bank, Research Department 3233, Inter-American Development Bank, Research Department.
  3. Máximo Torero, 2003. "Peruvian Privatization: Impacts On Firm Performance," Research Department Publications, Inter-American Development Bank, Research Department 3173, Inter-American Development Bank, Research Department.
  4. Máximo Torero & Lorena Alcazar & Eduardo Nakasone, 2007. "Provision of Public Services and Welfare of the Poor: Learning from an Incomplete Electricity Privatization Process in Rural Peru," Research Department Publications, Inter-American Development Bank, Research Department 3232, Inter-American Development Bank, Research Department.
  5. Garrick Hileman, 2012. "The seven mechanisms for achieving sovereign debt sustainability," Economic History Working Papers, London School of Economics and Political Science, Department of Economic History 42878, London School of Economics and Political Science, Department of Economic History.

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