Do Business-Friendly Reforms Boost GDP?

Karl Whelan () and Tamanna Adhikari

No 15879, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use the time series variation in the World Bank's ``distance to frontier'' estimates of the ease of doing business to assess the effects of changes in this variable on real GDP per capita. The use of Vector Autoregression techniques allows us to identify shocks to the ease of doing business that are initially uncorrelated with GDP, thus addressing an important endogeneity problem that affects the cross-sectional literature on this topic. The results are surprising. We report a robust finding that improvements to the ease of doing business have at least a temporary negative impact on GDP and find little evidence for a positive effect in the years following these improvements.

Keywords: Doing business; Institution; Economic growth (search for similar items in EconPapers)
JEL-codes: O43 O47 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-mac
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Working Paper: Do Business-Friendly Reforms Boost GDP? (2019)
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