Can structural reforms unleash private investment?

Christos Mavrogiannis, Nico Zorell and Christoph Zwick

No 3273, Working Paper Series from European Central Bank

Abstract: This paper examines the impact of labour and product market reforms on private investment across 26 advanced economies from 1975 to 2020. To this end, we combine a narrative database on major structural reforms with local projections and augmented inverse probability weighting. We find that a major labour market reform typically increases the level of real private investment by 5% cumulatively within six years, while a major product market reform yields an impact of 3%. Structural reforms are particularly effective in stimulating private investment when the private sector has access to ample external finance and the rule of law is strong. Overall, our findings point to an important role for structural reforms in boosting private investment and thus long-term growth prospects in advanced economies. JEL Classification: E22, O43, L51

Keywords: investment; labour market reform; product market reforms; structural reforms (search for similar items in EconPapers)
Date: 2026-08
Note: 1641505
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp3273~292f21a541.en.pdf (application/pdf)

Related works:
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:ecb:ecbwps:20263273

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().