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Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle

Ian Babetskii () and Nauro F. Campos ()
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Ian Babetskii: Czech National Bank

Authors registered in the RePEc Author Service: Jan Babecký

No 2638, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: Why are socially beneficial reforms not implemented? One simple answer to this question (which has received little attention in the literature) is that this may be caused by generalized uncertainty about the effectiveness of reforms. If agents are unsure about whether a proposed reform will work, it will be less likely to be adopted. Despite the numerous benefits economists assign to structural reforms, the empirical literature has thus far failed to establish a positive and significant effect of reforms on economic performance. We collect data from 43 econometric studies (for more than 300 coefficients on the effects of reform on growth) and show that approximately one third of these coefficients is positive and significant, another third is negative and significant, and the final third is not statistically significant different from zero. In trying to understand this remarkable variation, we find that the measurement of reform and controlling for institutions and initial conditions are main factors in decreasing the probability of reporting a significant and positive effect of reform on growth.

Keywords: economic growth; structural reforms (search for similar items in EconPapers)
JEL-codes: O11 P21 C49 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-tra
Date: 2007-02
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Published in: Journal of Comparative Economics, 2011, 39 (2), 140-158

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Related works:
Working Paper: Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle (2007) Downloads
Working Paper: Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle (2007) Downloads
Working Paper: Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle (2007) Downloads
Working Paper: Does reform work? An econometric examination of the reform-growth puzzle (2007) Downloads
Working Paper: Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle (2006) Downloads
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