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Public finances and Public Private Partnerships in the European Union

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  • Alessandra Cepparulo
  • Giuseppe Eusepi
  • Luisa Giuriato

Abstract

We analyse the Public Private Partnerships (PPPs) in order to account for their uneven distribution among the European Union countries and to identify the motivations of the public actor in selecting PPPs. We focus on the fiscal incentives to overcome budget and borrowing constraints, taking into account the political features and institutional frameworks of the countries. Using IMF data over the years 1990-2015, we confirm that the state of public finances impacts on the government’s choice of PPPs: more financially constrained governments find the PPP option attractive, while high-debt countries reduce the private investors’ interest in PPP. Fiscal rules increased the PPP bias in the pre-crisis period due to the possibility of off-balance accounting, while the post-crisis reform of the Stability and Growth Pact and the increased supranational and domestic surveillance seem to better discipline PPP employment. PPPs are, also, confirmed to be under the influence of political competition and government’s preferences for current expenditures.

Suggested Citation

  • Alessandra Cepparulo & Giuseppe Eusepi & Luisa Giuriato, 2021. "Public finances and Public Private Partnerships in the European Union," Working Papers in Public Economics 195, University of Rome La Sapienza, Department of Economics and Law.
    • Handle: RePEc:sap:wpaper:wp195
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    1. Janusz Myszczyszyn, 2022. "Public-Private Partnership - Development and Dilemmas for the Future from the Point of View of the Public Partner," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 390-400.
    2. Marina Mikhailovna Pukhova & Irina Anatolievna Merkulina & Dmitry Yuryevich Bashkov, 2021. "Developing Public–Private Partnership Projects to Enhance Innovation Capability in the Defence Industry," Economies, MDPI, vol. 9(4), pages 1-21, October.

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    More about this item

    Keywords

    Public Private Partnerships; Fiscal illusion; Budget constraints; Fiscal rules;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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