Tax Smoothing and the Cross-Country Pattern of Privatization

26 Pages Posted: 10 Sep 2013

See all articles by Peter Berck

Peter Berck

University of California, Berkeley - Department of Agricultural & Resource Economics

Jonathan Lipow

Government of the United States of America - Defense Resources Management Institute

Ralf Steinhauser

Universit at Hamburg; Research School of Economics

Date Written: August 31, 2005

Abstract

Privatization generally enhances firm-level efficiency. The impact of privatization on fiscal efficiency has, however, been overlooked. Using the "tax-smoothing" ideas articulated in Barro (1979) and Bohn (1990), we argue that privatization may have an important impact on the welfare losses associated with tax collection. This impact can either enhance or erode the efficiency of taxation. We hypothesize that countries that benefit in terms of fiscal efficiency will privatize aggressively while countries that enjoy fiscal benefits as a result of state ownership will show little interest in privatization. Statistical tests are conducted that provide considerable support for the hypothesis.

Keywords: privatization, tax smoothing, fiscal policy

Suggested Citation

Berck, Peter and Lipow, Jonathan and Steinhauser, Ralf, Tax Smoothing and the Cross-Country Pattern of Privatization (August 31, 2005). World Development, Vol. 34, No. 2, 2006. Available at SSRN: https://ssrn.com/abstract=2322819

Peter Berck

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

Berkeley, CA 94720
United States

Jonathan Lipow

Government of the United States of America - Defense Resources Management Institute ( email )

United States

Ralf Steinhauser (Contact Author)

Universit at Hamburg ( email )

Welckerstr. 8,
Hamburg, Hamburg 20354
Germany

HOME PAGE: http://www.wiso.uni-hamburg.de/professuren/vwl-wachstum-umwelt-und-ressourcen/

Research School of Economics ( email )

Arndt Building 25a
Canberra, Australian Capital Territory 0200
Australia
0261254667 (Phone)

HOME PAGE: http://rse.anu.edu.au/people/people.php?ID=950

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