The missing shock: the macroeconomic impact of British privatisation

In this paper the impact of privatization on macroeconomic performance in the United Kingdom is tested using quarterly data from 1979 to 1999. Privatization proceeds have been included in a simple analytical frame-work dealing with both demand and supply-side of the economy. Multi-variate cointegration techniques have been used in order to consider the nonstationarity of the time series involved. The empirical results show that privatizations have no long-run effects on output in the UK. This result is consistent with microeconomic evidence that shows that in the UK ownership change per se had little impact on long term productivity trends. Moreover it is found that privatization proceeds have contributed to sustaining public expenditures.