ECONOMIC GROWTH AND WELFARE ANALYSIS OF PRIVATIZATION POLICIES

Abstract

This paper aims to analyze the effects of privatization policies of state-owned
companies on the macroeconomic aggregates and welfare. These policies are simulated using both plain privatization policies and combined with policies of reduction
of the public sector inefficiency and tax rates. It uses a computable general equilibrium
model calibrated for the Brazilian economy, considering the setup of the current fiscal
budget, defined by the Constitutional Amendment 95/2016. It was observed that plain
privatization policies, even if they show less expressive results such as welfare gains of approximately 0.5%, they might increase the investments by 5%. Policies involving a
reduction in the tax burden would present better results in the macroeconomic aggregates, especially in terms of investment and GDP. On the other hand, the privatization
policies combined with a reduction of inefficiency would achieve better results in terms
of welfare gains. Therefore, the potential benefits of privatization policies were shown,
especially when they are combined with other policies.