This paper investigates the macroeconomic behaviour of an economy shifting from state to private ownership. In the model, privatization not only fosters growth, but also entails a fall in labour hoarding and an increase in unemployment. Governments may balance these two conflicting objectives by choosing either a fast or a slow privatization policy. We analyse how incomplete information about the type of government influences policy choices. It is shown that an employment-oriented government may start by undertaking a fast privatization policy and reveal its true nature by adopting a slow pace in a second phase.
BESANCENOT, D. and VRANCEANU, R. (1997). On the Dynamic Consistency of Economy-Wide Privatization : A Theoretical Approach. Economic Systems, pp. 151-164.