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The missing shock: the macroeconomic impact of British Privatizations

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  • Emanuele Bacchiocchi
  • Massimo Florio
  • Mara Grasseni

Abstract

In this paper the impact of privatization on macroeconomic performance in the United Kingdom is tested using quarterly data from 1979 to 1999. Privatization proceeds have been included in a simple analytical framework dealing with both demand and supply-side of the economy. Multivariate cointegration techniques have been used in order to consider the nonstationarity of the time series involved. The empirical results show that privatizations have no long-run effects on output in the UK. This result is consistent with microeconomic evidence that shows that in the UK ownership change per se had little impact on long term productivity trends. Moreover it is found that privatization proceeds have contributed to sustaining public expenditures.

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  • Emanuele Bacchiocchi & Massimo Florio & Mara Grasseni, 2005. "The missing shock: the macroeconomic impact of British Privatizations," Applied Economics, Taylor & Francis Journals, vol. 37(14), pages 1585-1596.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:14:p:1585-1596
    DOI: 10.1080/00036840500215170
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    1. Mr. George A Mackenzie, 1997. "The Macroeconomic Impact of Privatization," IMF Policy Discussion Papers 1997/009, International Monetary Fund.
    2. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    3. Emanuele Bacchiocchi & Massimo Florio & Mara Grasseni, 2005. "The missing shock: the macroeconomic impact of British Privatizations," Applied Economics, Taylor & Francis Journals, vol. 37(14), pages 1585-1596.
    4. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    5. Johansen, Soren & Juselius, Katarina, 1994. "Identification of the long-run and the short-run structure an application to the ISLM model," Journal of Econometrics, Elsevier, vol. 63(1), pages 7-36, July.
    6. G. A. Mackenzie, 1998. "The Macroeconomic Impact of Privatization," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 363-373, June.
    7. Oulton, Nicholas, 1995. "Supply Side Reform and UK Economic Growth: What Happened To The Miracle?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 154, pages 53-70, November.
    8. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    9. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
    10. Mr. Steven A Barnett, 2000. "Evidenceon the Fiscal and Macroeconomic Impact of Privatization," IMF Working Papers 2000/130, International Monetary Fund.
    11. Willem H. Buiter, 1990. "Principles of Budgetary and Financial Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524139, April.
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    Cited by:

    1. Bastianin, Andrea & Castelnovo, Paolo & Florio, Massimo, 2018. "Evaluating regulatory reform of network industries: a survey of empirical models based on categorical proxies," Utilities Policy, Elsevier, vol. 55(C), pages 115-128.
    2. Emanuele Bacchiocchi & Massimo Florio & Mara Grasseni, 2005. "The missing shock: the macroeconomic impact of British Privatizations," Applied Economics, Taylor & Francis Journals, vol. 37(14), pages 1585-1596.
    3. Orietta DESSY & Massimo FLORIO, 2004. "Workers' earnings in the UK before and after privatisation: a study of five industries," Departmental Working Papers 2004-13, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Schuster, Philipp & Schmitt, Carina & Traub, Stefan, 2013. "The retreat of the state from entrepreneurial activities: A convergence analysis for OECD countries, 1980–2007," European Journal of Political Economy, Elsevier, vol. 32(C), pages 95-112.
    5. Emanuele Bacchiocchi & Toru Kitagawa, 2020. "Locally- but not globally-identified SVARs," CeMMAP working papers CWP40/20, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    6. Giuseppe Cinquegrana & Serena Migliardo & Domenico Sarno, 2016. "Comparative analysis of private and public provision of the water and waste services by the Italian municipalities," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(3), pages 149-176.
    7. Andrea Bastianin & Paolo Castelnovo & Massimo Florio, 2017. "The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues," Working Papers 2017.22, Fondazione Eni Enrico Mattei.

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    More about this item

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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