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Open Economies Review

, Volume 29, Issue 4, pp 879–910 | Cite as

Can Reform Waves Turn the Tide? Some Case Studies using the Synthetic Control Method

  • Bibek Adhikari
  • Romain Duval
  • Bingjie Hu
  • Prakash Loungani
Research Article

Abstract

A number of advanced economies carried out a sequence of extensive reforms of their labor and product markets in the 1990s and early 2000s. Using the Synthetic Control Method (SCM), this paper implements six case studies of well-known waves of reforms, those of New Zealand, Australia, Denmark, Ireland and Netherlands in the 1990s, and the labor market reforms in Germany in the early 2000s. In four of the six cases, GDP per capita was higher than in the control group as a result of the reforms. No difference between the treated country and its synthetic counterpart could be found in the cases of Denmark and New Zealand, which in the latter case may have partly reflected the implementation of reforms under particularly weak macroeconomic conditions. Overall, also factoring in the limitations of the SCM in this context, the results are suggestive of a positive but heterogenous effect of reform waves on GDP per capita.

Keywords

Structural reforms Synthetic control method Liberalization Labor and productivity market reforms Growth 

JEL Classification

E02 J08 O40 O43 

Notes

Acknowledgments

The authors would like to thank Ashvin Ahuja and Melesse Tashu for comments. The views expressed in this paper are those of the authors and cannot be attributed to the IMF or its member countries. Any remaining errors are ours.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Bibek Adhikari
    • 1
  • Romain Duval
    • 2
  • Bingjie Hu
    • 3
  • Prakash Loungani
    • 2
  1. 1.Department of EconomicsIllinois State UniversityNormalUSA
  2. 2.International Monetary FundWashington, D.C.USA
  3. 3.World Bank GroupWashington, D.C.USA

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