IDEAS home Printed from https://ideas.repec.org/p/fgv/epgewp/297.html
   My bibliography  Save this paper

Infrastructure privatization in a neoclassical economy : macroeconomic impact and welfare computation

Author

Listed:
  • Ferreira, Pedro Cavalcanti

Abstract

In this paper a competitive general equilibrium model is used to investigate the welfare and long run allocation impacts of privatization. There are two types of capital in this model economy, one private and the other initially public ('infrastructure'), and a positive externality due to the latter is assumed. A benevolent government can improve upon decentralized allocation internalizing the externality, but it introduces distortions in the economy through the finance of its investments. It is shown that even making the best case for public action - maximization of individuals' welfare, no• operation inefficiency and free supply to society of infrastructure services - privatization is welfare improving for a large set of economies. Hence, arguments against privatization based solely on under-investment are incorrect, as this maybe the optimal action when the financing of public investment are considered. When operation inefficiency is introduced in the public sector, gains from privatization are much higher and positive for most reasonable combinations of parameters .

Suggested Citation

  • Ferreira, Pedro Cavalcanti, 1997. "Infrastructure privatization in a neoclassical economy : macroeconomic impact and welfare computation," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 297, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
  • Handle: RePEc:fgv:epgewp:297
    as

    Download full text from publisher

    File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/573/1/000076721.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Novaes, Walter & Werlang, Sergio, 1995. "Inflationary bias and state-owned financial institutions," Journal of Development Economics, Elsevier, vol. 47(1), pages 135-154, June.
    2. Flôres Junior, Renato Galvão & Szafarz, Ariane, 1996. "Processus stochastiques en finance (2ème partie)," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 295, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    3. Cardoso, Renato Fragelli, 1995. "Profit sharing with heterogeneous entrepreneurial prowess," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 265, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    4. Castro, Hélio de Oliveira Portocarrero de & Oliveira, Luiz Guilherme Schymura de & Cardoso, Renato Fragelli & Magalhães, Uriel de, 1993. "Os sistemas previdenciários e uma proposta para a reformulação do modelo brasileiro," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 211, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    5. Castro, Hélio de Oliveira Portocarrero de & Oliveira, Luiz Guilherme Schymura de & Cardoso, Renato Fragelli & Werlang, Sérgio Ribeiro da Costa & Magalhães, Uriel de, 1994. "Regimes complementares de previdência," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 238, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    6. Ferreira, Pedro Cavalcanti & Ellery Júnior, Roberto de Góes, 1995. "Crescimento econômico, rendimentos crescentes e concorrência monopolista," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 270, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    7. Castro, Hélio de Oliveira Portocarrero de & Oliveira, Luiz Guilherme Schymura de & Cardoso, Renato Fragelli & Magalhães, Uriel de, 1993. "Previdência social pública: a experiência brasileira," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 210, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fgv:epgewp:297. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Núcleo de Computação da FGV EPGE). General contact details of provider: http://edirc.repec.org/data/epgvfbr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.