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Economic Uncertainty and Structural Reforms

Alessandra Bonfiglioli () and Gino Gancia ()

No 847, Working Papers from Barcelona Graduate School of Economics

Abstract: Does economic uncertainty promote the implementation of structural reforms? We answer this question using one of the most exhaustive cross-country panel data set on reforms in six major areas and measuring economic uncertainty with stock market volatility. To address endogeneity concerns, we propose various identification strategies, instrumenting uncertainty with world shocks to volatility and with natural disasters, terrorist attacks, political coups and revolutions. Across all specifications, we find that uncertainty has a positive and significant effect on the adoption of reforms. This result is robust to the inclusion of a large number of controls, such as political variables, economic variables, crisis indicators, and a host of country, reform and time fixed effects.

Keywords: reforms; uncertainty (search for similar items in EconPapers)
JEL-codes: E02 E60 L51 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-mac
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Related works:
Working Paper: Economic Uncertainty and Structural Reforms (2018) Downloads
Working Paper: Economic uncertainty and structural reforms (2018) Downloads
Working Paper: Economic Uncertainty and Structural Reforms (2015) Downloads
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