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The short term effects of structural reforms and institutional improvements in OECD economies

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  • Christos Mavrogiannis

    (University of Patras)

  • Athanasios Tagkalakis

    (Bank of Greece, University of Patras and Hellenic Parliamentary Budget Office)

Abstract

Using a panel of 37 OECD countries over the period 1990–2019, we examine the short to medium term effect of structural reforms and governance or institutional improvements on growth. Employing an updated OECD dataset on product and labor market regulation and governance indicators for the World Bank and after controlling for the endogeneity of reforms via the augmented inverse probability weighting (AIPW) method we find that it is governance or institutional improvements (such as on government effectiveness, regulatory quality and rule of law) that have positive growth effects on real GDP in most cases. Labor market reforms do have positive growth effects under specific conditions, i.e., at times of recession, better governance, low indebtedness, low trade openness, high employment rate and tight monetary policy. Product market reforms have negative growth effects at most times and states considered. However, we find that, countries with better governance quality and deregulated labor market can reap significant benefits from them

Suggested Citation

  • Christos Mavrogiannis & Athanasios Tagkalakis, 2022. "The short term effects of structural reforms and institutional improvements in OECD economies," Working Papers 306, Bank of Greece.
    • Handle: RePEc:bog:wpaper:306
    DOI: 10.52903/wp2022306
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    References listed on IDEAS

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    More about this item

    Keywords

    governance; regulatory quality; rule of law; structural reforms; product mar- ket; labor market; growth;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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