The Macroeconomic Effects of Structural Reforms in Latin America and the Caribbean

Antonio David, Takuji Komatsuzaki and Samuel Pienknagura

No 2020/195, IMF Working Papers from International Monetary Fund

Abstract: This paper estimates the macroeconomic effects of structural reforms in Latin America and the Caribbean (LAC) using the dataset constructed by Alesina et al. (2020). We find that large changes in the reform index have positive effects on GDP and employment that reach 2 percent after 5 years. Furthermore, reforms boost investment, exports, imports, and reduce export concentration, in addition to favoring tradable sectors. Nonetheless, the results also indicate that the effects of reforms have not been uniform across different segments of the population. These findings bring to the forefront the need to consider accompanying policies to ensure that reforms promote inclusive growth. Moreover, evidence from country case studies using the synthetic control method point to heterogeneous effects of reforms on income per capita.

Keywords: WP; reform; product market; liberalization; structural reform; reform index; finance reform; total factor productivity; reform reversal; trade reform index; reforms index lead; reform episode; reform effort; reform convergence; reform impetus; reform agenda; Structural reforms; Employment protection; Commodity markets; Total factor productivity; Trade liberalization; Caribbean; South America; Central America; Global; Latin America; Macroeconomic Effects; product market reform; employment protection reforms index lead; financial market reform (search for similar items in EconPapers)
Pages: 32
Date: 2020-09-25
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