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Journal articles (1997), Economic Systems, pp. 151-164

On the Dynamic Consistency of Economy-Wide Privatization : A Theoretical Approach

BESANCENOT D., VRANCEANU Radu

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.