The macroeconomic and socioeconomic effects of structural reforms in Latin America and the Caribbean

Antonio David, Takuji Komatsuzaki and Samuel Pienknagura

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper estimates the macroeconomic effects of market-oriented reforms in Latin America and the Caribbean using the IMF Structural Reform database. We find that large changes in the reform index have positive effects on GDP that exceed 2 percent after five years. Furthermore, reforms boost employment, investment, exports, and imports and reduce export concentration, in addition to favoring tradable sectors. The evidence on the effects of reforms on business confidence is mixed, and the effects on total factor productivity are positive, but less precisely estimated. Nonetheless, our results also indicate that the effects of reforms have not been uniform across different segments of the population. Our results are robust to the use of an instrumental variables approach that exploits regional waves of reform to deal with endogeneity concerns. These findings bring to the forefront the need to consider accompanying policies to ensure that reforms promote inclusive growth.

Keywords: structural reforms; Latin America; macroeconomic effects (search for similar items in EconPapers)
JEL-codes: E20 O11 O40 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-04-01
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Published in Economía, 1, April, 2021, 21(2), pp. 115 - 155. ISSN: 1529-7470

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http://eprints.lse.ac.uk/123304/ Open access version. (application/pdf)

Related works:
Journal Article: The Macroeconomic and Socioeconomic Effects of Structural Reforms in Latin America and the Caribbean (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:123304

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