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The Impact of Structural Reforms: A Review of the Literature

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Structural Reforms

Abstract

This chapter provides a broad overview of the relevant literature on the impact of reforms, focusing on labour and product markets. To this end it provides a selective survey of a large literature from various disciplines, including empirical labour economics and macroeconomics. The chapter discusses different approaches that have been used to assess the impact of reforms, both empirical and theoretical (mainly DSGE models), and offers a discussion of how empirical studies have dealt with the issue of endogeneity of reform. The last part of the chapter briefly discusses the political economy of reforms.

The views expressed in this chapter are those of the authors and should not be attributed to De Nederlandsche Bank, the European Central Bank or the European Investment Bank.

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Notes

  1. 1.

    For example, studies using changes in measures of economic freedom as a proxy for reform are neglected to large extent (see de Haan et al. 2006 for a discussion).

  2. 2.

    Researchers have also used several other econometric techniques to deal with endogeneity. Bassanini and Duval (2006) estimate their model using a GMM specification in which policies/institutions are instrumented with their lags. Furthermore, thresholds can be imposed to lower the risk of endogeneity. For instance, Bouis et al. (2012) model a structural reform as a change in the institutional variable by at least two standard deviations of the average annual change. Focusing solely on these large “reform episodes” can limit endogeneity issues.

  3. 3.

    As an alternative, Wiese (2014) suggests using structural break filters in conjunction with a careful analysis of policy documents to identify structural reforms.

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Authors and Affiliations

  1. Department of Economic Policy, De Nederlandsche Bank, Amsterdam, The Netherlands

    Jante Parlevliet

  2. European Investment Bank, Luxembourg, Luxembourg

    Simon Savsek

  3. European Central Bank, Frankfurt, Germany

    Máté Tóth

Authors
  1. Jante Parlevliet
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  2. Simon Savsek
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  3. Máté Tóth
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Correspondence to Jante Parlevliet .

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Editors and Affiliations

  1. De Nederlandsche Bank, Amsterdam, The Netherlands; University of Groningen, Groningen, The Netherlands

    Jakob de Haan

  2. De Nederlandsche Bank, Amsterdam, The Netherlands

    Jante Parlevliet

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Parlevliet, J., Savsek, S., Tóth, M. (2018). The Impact of Structural Reforms: A Review of the Literature. In: de Haan, J., Parlevliet, J. (eds) Structural Reforms. Springer, Cham. https://doi.org/10.1007/978-3-319-74400-1_2

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