The Interaction and Sequencing of Policy Reforms

Jose Asturias, Sewon Hur, Timothy Kehoe and Kim Ruhl

No 21840, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In what order should a developing country adopt policy reforms? Do some policies complement each other? Do others substitute for each other? To address these questions, we develop a two-country dynamic general equilibrium model with entry and exit of firms that are monopolistic competitors. The model includes barriers to entry of new firms, barriers to international trade, and barriers to contract enforcement. We find that the same reform can have very different effects on other economic outcomes, depending on the types of distortions present. In our model, we find that reforms to trade barriers and barriers to the entry of new firms are substitutable, as are reforms to contract enforcement and trade barriers. In contrast, we find that reforms to contract enforcement and the barriers to entry are complementary. Finally, the optimal sequence of reforms requires reforming trade barriers before contract enforcement.

JEL-codes: F13 F4 O11 O19 O24 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-bec and nep-dge
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Citations: View citations in EconPapers (19)

Published as Jose Asturias & Sewon Hur & Timothy J. Kehoe & Kim J. Ruhl, 2016. "The Interaction and Sequencing of Policy Reforms," Journal of Economic Dynamics and Control, .

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Related works:
Journal Article: The interaction and sequencing of policy reforms (2016)
Working Paper: The Interaction and Sequencing of Policy Reforms (2016)
Working Paper: The Interaction and Sequencing of Policy Reforms (2015)
Working Paper: The Interaction and Sequencing of Policy Reforms (2015)
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