The Macroeconomic Impact of Privatization

G. A. Mackenzie
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G. A. Mackenzie: International Monetary Fund

IMF Staff Papers, 1998, vol. 45, issue 2, 363-373

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.

JEL-codes: E62 L33 (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:45:y:1998:i:2:p:363-373

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