Structural Policies and Growth: Time Series Evidence from a Natural Experiment

Theo Eicher and Till Schreiber

No 48, Working Papers from Department of Economics, College of William and Mary

Abstract: Documenting the long term impact of structural policies on economic performance has generated tremendous interest in the development literature. In contrast, contemporary effects of structural policies are difficult to establish. Structural policies seldom change sufficiently in the short run, and accepted instruments to control for endogeneity in cross sections are inappropriate for time series analysis. In this paper we utilize an eleven year panel of 26 transition countries to identify short term effects of structural policies that are large and significant. A ten percent change in the quality of structural policies (or the Rule of Law) towards OECD standards is shown to raise annual growth by about 2.5 percent. To control for endogeneity, we instrument using the hierarchy of institutions hypothesis and find that it holds robust explanatory power. We also document that early reformers reap the greatest benefits, but that it is never too late to begin structural policy reforms.

Keywords: structural policies; growth; dynamic panel; transition economies (search for similar items in EconPapers)
JEL-codes: O11 O40 P48 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2006-11-15
New Economics Papers: this item is included in nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://economics.wm.edu/wp/cwm_wp48.pdf (application/pdf)

Related works:
Journal Article: Structural policies and growth: Time series evidence from a natural experiment (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwm:wpaper:48

Access Statistics for this paper

More papers in Working Papers from Department of Economics, College of William and Mary Contact information at EDIRC.
Bibliographic data for series maintained by Daifeng He ( this e-mail address is bad, please contact ) and Alfredo Pereira ().