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When do countries implement structural reforms?

Author

Listed:
  • Da Silva, António Dias
  • Givone, Audrey
  • Sondermann, David
Abstract
The objective of this paper is to investigate which factors macroeconomic, policy‐related or institutional ‐ foster the implementation of structural reforms. To this objective, we look at episodes of structural reforms over three decades across 40 OECD and EU countries and link them to such factors. Our results suggest that structural reforms implementation is more likely during deep recessions and when unemployment rates are high. Moreover, the further distant from best practices, the more likely a country implements reforms. External pressures, such as being subject to a financial assistance programme, or being part of the EU Single Market facilitated pro‐competitive reforms. If at all, low interest rates tend to promote rather than discourage structural reforms, while there seems no clear link between fiscal policy and reforms. Moreover, reforms in product markets tend to increase the likelihood of labour market reforms following suit. Many robustness checks have been carried out which confirm our main results. JEL Classification: C23, D70, D72, P11, P16

Suggested Citation

  • Da Silva, António Dias & Givone, Audrey & Sondermann, David, 2017. "When do countries implement structural reforms?," Working Paper Series 2078, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20172078
    Note: 686280
    as

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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2078.en.pdf
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    References listed on IDEAS

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    1. Stieglitz, Moritz & Setzer, Ralph, 2022. "Firm-level employment, labour market reforms, and bank distress," Journal of International Money and Finance, Elsevier, vol. 120(C).
    2. Nauro F. Campos & Paul De Grauwe & Yuemei Ji, 2017. "Structural Reforms, Growth and Inequality: An Overview of Theory, Measurement and Evidence," CESifo Working Paper Series 6812, CESifo.
    3. Rieth, Malte & Wittich, Jana, 2020. "The impact of ECB policy on structural reforms," European Economic Review, Elsevier, vol. 122(C).
    4. Ana Fontoura Gouveia & Gustavo Monteiro & Sílvia Fonte Santa, 2019. "Product Markets’ Deregulation: A more Productive, more Effcient and more Resilient Economy?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 230(3), pages 125-155, September.
    5. Antonio David & Takuji Komatsuzaki & Samuel Pienknagura, 2022. "The Macroeconomic and Socioeconomic Effects of Structural Reforms in Latin America and the Caribbean," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 115-155, June.
    6. Mr. Christian H Ebeke & Jan-Martin Frie & Louise Rabier, 2019. "Deepening the EU’s Single Market for Services," IMF Working Papers 2019/269, International Monetary Fund.
    7. Rovo,Natasha, 2020. "Structural Reforms to Set the Growth Ambition," Policy Research Working Paper Series 9175, The World Bank.
    8. Stefano Neri & Stefano Siviero, 2019. "The non-standard monetary policy measures of the ECB: motivations, effectiveness and risks," Questioni di Economia e Finanza (Occasional Papers) 486, Bank of Italy, Economic Research and International Relations Area.
    9. Benigno Pierpaolo & Canofari Paolo & Di Bartolomeo Giovanni & Messori Marcello, 2020. "The ECB’s Asset Purchase Programme: Theory, effects, and risks," wp.comunite 00147, Department of Communication, University of Teramo.
    10. Rasmus Wiese & Joåo Tovar Jalles & Jakob de Haan & João Tovar Jalles, 2024. "Labour Market Counter-Reforms in OECD Countries: Conditional Impact on Output and Employment Growth," CESifo Working Paper Series 11199, CESifo.
    11. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2017. "Für eine zukunftsorientierte Wirtschaftspolitik. Jahresgutachten 2017/18 [Towards a Forward-Looking Economic Policy. Annual Report 2017/18]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201718, February.
    12. Rieth, Malte & Wittich, Jana, 2020. "The impact of ECB policy on structural reforms," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 122.

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    More about this item

    Keywords

    linear probability model; panel data; political economy; structural reforms;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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