Privatization and European Economic and Monetary Union

Abstract

To qualify for full membership in the Economic and Monetary Union, member states had to meet strict budget deficit and government debt convergence criteria. This study analyzes whether deficits and indebtedness in the 1990s in Spain, Italy, Portugal and Greece were associated with a shift from privatization as a tool of economic restructuring, to privatization as a tool of European monetary convergence. The empirical results suggests that privatization funds accruing from the sale of state-owned enterprises in the Southern European countries might have been used to tackle budget deficits and meet the stringent criteria for monetary integration.Monetary Union; Privatization