## Evidenceon the Fiscal and Macroeconomic Impact of Privatization

_IMF Working Papers, July 1, 2000_

## Source details

**Canonical URL:** [Evidenceon the Fiscal and Macroeconomic Impact of Privatization](https://www.imf.org/en/publications/wp/issues/2016/12/30/evidenceon-the-fiscal-and-macroeconomic-impact-of-privatization-3692)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/evidenceon-the-fiscal-and-macroeconomic-impact-of-privatization-3692/index.md)
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## Bibliographic details
- Authors: Steven A Barnett
- Published: July 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451855180.001

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### Summary findings
- The paper empirically investigates the relationship between privatization and measures of fiscal and macroeconomic performance.
- Privatization proceeds transferred to the budget tend to be saved.
  - They are largely used to reduce domestic financing.
  - There is little evidence that they are used to finance a larger deficit.
- Total privatization (as opposed to just the proceeds transferred to the budget) is correlated with an improvement in macroeconomic performance.
  - Manifestations include higher real GDP growth and lower unemployment.
  - The correlation should be interpreted cautiously because the evidence is not sufficient to establish causality.
- The analysis of proceeds transferred to the budget is, by construction, restricted to those proceeds, leaving open the question of what happens to privatization proceeds not transferred to the budget.

### Methodological scope and limitations
- The study distinguishes between:
  - Privatization proceeds transferred to the budget (analyzed for fiscal use and financing implications).
  - Total privatization (analyzed for correlation with macroeconomic outcomes).
- Limitation highlighted:
  - Findings on budget-transferred proceeds do not inform the allocation or macroeconomic effects of proceeds not transferred to the budget.
- Causality:
  - Correlations between total privatization and macroeconomic improvement are not sufficient to establish causality.

### Policy-relevant implications
- When privatization proceeds are transferred to the budget, they tend to be saved and used to reduce domestic financing rather than increasing deficits.
- Policymakers should be cautious in interpreting positive correlations between privatization and macroeconomic outcomes as causal effects.
- The disposition of privatization proceeds not transferred to the budget remains an open policy and analytical question.

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## Content in this bundle

- **Evidence on the Fiscal and Macroeconomic Impact of Privatization -WP/00/130**
  - [Evidence on the Fiscal and Macroeconomic Impact of Privatization -WP/00/130 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2000/_wp00130.pdf.md){rel="alternate" type="text/markdown"}
  - [Evidence on the Fiscal and Macroeconomic Impact of Privatization -WP/00/130 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2000/_wp00130.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/evidenceon-the-fiscal-and-macroeconomic-impact-of-privatization-3692_