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Evidenceon the Fiscal and Macroeconomic Impact of Privatization

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  • Steven Barnett
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    Abstract

    This paper empirically investigates the relationship between privatization and measures of fiscal and macroeconomic performance. One of the main findings is that privatization proceeds transferred to the budget tend to be saved. Specifically, they are largely used to reduce domestic financing, with little evidence that they are used to finance a larger deficit. However, by construction, this part of the study is restricted to privatization proceeds transferred to the budget, leaving open the question of what happens to those proceeds not transferred to the budget. The other main finding is that total privatization (as opposed to just the proceeds transferred to the budget) is correlated with an improvement in macroeconomic performance as manifested in higher real GDP growth and lower unemployment. However, this result needs to be interpreted cautiously as the evidence is not sufficient to establish causality.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 00/130.

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    Length: 24
    Date of creation: 01 Jul 2000
    Date of revision:
    Handle: RePEc:imf:imfwpa:00/130

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    Related research

    Keywords: Privatization; privatization proceeds; impact of equation; samples; covariance; amount of standard errors; equations; privatization process; private ownership; significance levels; dummy variable; probability value; probability; macroeconomic impact of statistical significance; random walk; correlation; econometrics; privatization variable; regression analysis; significance level; effect of regression equation; effects of linear models; dynamic models; not privatization agency; prediction; causation;

    This paper has been announced in the following NEP Reports:

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    Cited by:
    1. Birdsall, Nancy & Nellis, John, 2003. "Winners and Losers: Assessing the Distributional Impact of Privatization," World Development, Elsevier, vol. 31(10), pages 1617-1633, October.
    2. Clive Harris, 2003. "Private Participation in Infrastructure in Developing Countries : Trends, Impacts, and Policy Lessons," World Bank Publications, The World Bank, number 15124, October.
    3. Crivelli, Ernesto, 2013. "Fiscal impact of privatization revisited: The role of tax revenues in transition economies," Economic Systems, Elsevier, vol. 37(2), pages 217-232.
    4. Berck, Peter & Lipow, Jonathan & Steinhauser, Ralf, 2006. "Tax smoothing and the cross-country pattern of privatization," World Development, Elsevier, vol. 34(2), pages 238-246, February.
    5. Arbache, Jorge Saba, 2004. "Do Structural Reforms always Succeed? Lessons from Brazil," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    6. Samuel Adams, 2011. "Privatization and National Development: A Case Study of Ghana," Public Organization Review, Springer, vol. 11(3), pages 237-253, September.
    7. Massimo Florio & Mara Grasseni, 2003. "The missing shock: the macroeconomic impact of British privatisation," Departmental Working Papers 2003-21, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    8. Nixson, Frederick & Walters, Bernard, 2006. "Privatization, Income Distribution, and Poverty: The Mongolian Experience," World Development, Elsevier, vol. 34(9), pages 1557-1579, September.
    9. Ghosh, Saibal, 2008. "Does divestment matter for firm performance?: Evidence from the Indian experience," Economic Systems, Elsevier, vol. 32(4), pages 372-388, December.
    10. Mauricio Garrón B. & Carlos Gustavo Machicado & Katherina Capra, 2003. "Privatization in Bolivia: The Impact on Firm Performance," Research Department Publications 3154, Inter-American Development Bank, Research Department.
    11. Martimort, David & Straub, Stéphane, 2009. "Infrastructure privatization and changes in corruption patterns: The roots of public discontent," Journal of Development Economics, Elsevier, vol. 90(1), pages 69-84, September.

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