Short-run effects of product markets’ deregulation: a more productive, more efficient and more resilient economy?

Ana Gouveia (), Silvia Santos and Gustavo Monteiro
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Ana Gouveia: GPEARI - Research and Economic Policy Division

No 69, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: This paper assesses the short-term impact of product market deregulation in upstream sectors on the productivity growth of firms in downstream sectors (i.e. those firms using the output of the reformed sectors as inputs in their production process). Relying on a firm level database for the period 2004-2014 covering all Portuguese firms, we show that the most productive firms - those at the sectoral technological frontier - grasp short-run benefits from these reforms, which are then spread to the other existing firms via spillover mechanisms. In addition, reforms potentiate the exit of the least productive firms, improving the resource allocation in the economy. Finally, we show that the adoption of product market reforms in upstream sectors leads to a more resilient economy, better equipped to face adverse shocks.

Keywords: Product Market Reforms; Total Factor Productivity; Growth; Exit Rates; Resource Allocation; Resilience (search for similar items in EconPapers)
JEL-codes: D04 D22 L43 L51 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2017-03, Revised 2017-03
New Economics Papers: this item is included in nep-eff and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0069

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