On an unprecedented scale, nations at all income levels and across the political spectrum have initiated privatization programs over the past twenty years. This book presents an alternate view and argues that short-term macroeconomic considerations are often the true motive behind privatization programs.

1 Introduction.- 2 Economic Growth and Efficiency.- 2.1 Growth theories and empirical growth studies.- 2.2 The impact of privatization on output.- 2.3 Social security and privatization.- 2.4 Summary.- 3 The Politics of Privatization.- 3.1 Political-economy theories of macroeconomic policymaking.- 3.2 Government behavior and privatization.- 3.3 Summary.- 4 Fiscal Considerations of Privatization.- 4.1 The intertemporal budget constraint.- 4.2 Ricardian equivalence.- 4.3 The one period budget constraint.- 4.4 Fiscal motives of large industrialized economies: privatization in Germany and EMU.- 4.5 Summary.- 5 Macroeconomic Considerations of Privatization.- 5.1 Monetary aggregates and inflation.- 5.2 Balance-of-payments crises.- 5.3 Employment considerations of privatization.- 5.4 Political considerations and retrenchment benefits: the case of Pakistan.- 5.5 Summary.- 6 Modeling the Effects of Privatization.- 6.1 Outline of the framework.- 6.2 Baseline scenario.- 6.3 Privatization scenarios.- 6.4 Summary.- 6.5 Appendix.- 7 Coming Full Circle: The Case of Jamaica.- 7.1 Background.- 7.2 The role of the government and Jamaica’s growth puzzle.- 7.3 Jamaica’s political system and half-hearted reforms.- 7.4 Summary.- 8 Summary and Conclusion.- References.

On an unprecedented scale, nations at all income levels and across the political spectrum have initiated privatization programs over the past twenty years. In the course of this privatization movement, microeconomic efficiency arguments have become the standard justification for the divestment of public assets. Why Do Governments Divest? The Macroeconomics of Privatization presents an alternate view. This book argues that short-term macroeconomic considerations are often the true motive behind privatization programs, allowing politicians to exploit privatization for political gain by manipulating macroeconomic aggregates. Macroeconomic considerations can also influence the nature of privatization efforts, delaying necessary reforms in an effort to prevent undesirable short-run consequences. This focus on short-term objectives tends to hinder the achievement of economic efficiency and to impede progress towards higher living standards.

From the reviews of the first edition: "The policy of privatization – selling state-owned firms to the private sector - has grown from its relatively modest roots in Mrs. Thatcher’s Britain during the 1980s to be a world-scale phenomenon. … This is the theme of Schipke’s short, tightly focused and very useful book. … In fact, Schipke has carved out an interesting and under-researched niche – the macroeconomics of privatization. … The book is well written and … well edited and produced." (Journal of Economics, Vol. 77 (3), 2002)