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Public Sector Outsourcing: Creative Accounting or a Sustainable Improvement? – A Case Study for Austria

Author

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  • Doris Prammer

    () (Oesterreichische Nationalbank)

Abstract

The key rationale for public sector outsourcing is normally to improve public sector delivery as well as the state of public finances as defined by the Maastricht criteria. Like the underlying motives, the ensuing effects may also be diverse, however: increased business efficiency is generally accompanied by redistribution effects, and public sector outsourcing can affect the state’s role as a service provider and may have implications for the state’s stabilizing function. By the same token, the fiscal effects of such outsourcing are not always clear-cut. While the fiscal balance can typically be “improved” in the short term, the common fiscal indicators tend to become less meaningful as a result. The long-term fiscal effects of public sector outsourcing – especially, on long-term fiscal sustainability – have barely been researched. As a review of two Austrian outsourcing cases – BIG (federal facility management company) and ÖBB (Austrian Federal Railways) – shows, public sector outsourcing has a major impact on the assessment of fiscal sustainability without actually improving fiscal sustainability itself.

Suggested Citation

  • Doris Prammer, 2009. "Public Sector Outsourcing: Creative Accounting or a Sustainable Improvement? – A Case Study for Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 118-135.
  • Handle: RePEc:onb:oenbmp:y:2009:i:1:b:7
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    References listed on IDEAS

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    Cited by:

    1. Karin Fischer & Rauf Gönenç & Robert W. R. Price, 2011. "Austria: Public Sector Inefficiencies Have Become Less Affordable," OECD Economics Department Working Papers 897, OECD Publishing.

    More about this item

    Keywords

    sustainability of public finances; effects of public-sector outsourcing; creative accounting;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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