Public-Sector Cost of Capital: An Empirical Test of Peltzman’s Conjecture

10 Pages Posted: 24 Apr 2019 Last revised: 29 Jul 2019

See all articles by Marian W. Moszoro

Marian W. Moszoro

George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES); Warsaw School of Economics (SGH)

Date Written: July 25, 2019

Abstract

I test whether public-sector ownership in regulated industries reduces conventional measures of risk utilizing an exogenous event to the air transportation industry. I find that government-sponsored enterprises show significantly lower price volatility than non-government-sponsored enterprises. The upshot for governments with long-term neutral fiscal policy is that public services' cash flows under public-sector provision should be discounted at a lower rate than cash flows under private-sector provision.

Keywords: Regulation, Utilities, Cost of Capital

JEL Classification: L51, L32, G32

Suggested Citation

Moszoro, Marian W., Public-Sector Cost of Capital: An Empirical Test of Peltzman’s Conjecture (July 25, 2019). GMU Working Paper in Economics No. 19-17. Available at SSRN: https://ssrn.com/abstract=3359685 or http://dx.doi.org/10.2139/ssrn.3359685

Marian W. Moszoro (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

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