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On the Sequencing of Structural Reforms

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  • Sebastian Edwards

Abstract

Both OECD and developing economies have embarked on structural reforms aimed at dismantling regulations and reducing the extent of distortions affecting different sectors of their economies. Regardless of the marked difference, both groups have to deal with the problems of the appropriate sequencing and speed of reforms. This paper first critically reviews the LDCs' related literature on sequencing and speed of structural reforms drawing out features which are of relevance for OECD economies. The paper then develops a formal framework based on a welfare criterion for evaluating efficiency effects of structural policies paying particular attention to the way in which distortions interact both intra and inter-temporally. The framework is then used to discuss some of the important issues such as the sequencing of micro and macro reforms ("competition of instruments"), broad front versus sequential reforms, and the role of policy credibility.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3138.

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Date of creation: Oct 1989
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Handle: RePEc:nbr:nberwo:3138

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  1. repec:imf:imfocp:54 is not listed on IDEAS
  2. Dervis, Kemal & de Melo, Jaime & Robinson, Sherman, 1981. "A General Equilibrium Analysis of Foreign Exchange Shortages in a Developing Economy," Economic Journal, Royal Economic Society, vol. 91(364), pages 891-906, December.
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  7. Joshua Aizenman & Jacob Frenkel, 1986. "Wage Indexation, Supply Shocks, and Monetary Policy in a Small, Open Economy," NBER Chapters, in: Economic Adjustment and Exchange Rates in Developing Countries, pages 89-142 National Bureau of Economic Research, Inc.
  8. Dornbusch, Rudiger, 1974. "Tariffs and nontraded goods," Journal of International Economics, Elsevier, vol. 4(2), pages 177-185, May.
  9. Bhattacharya, A. & Linn, J.F., 1988. "Trade And Industrial Policies In The Developing Countries Of East Asia," World Bank - Discussion Papers 27, World Bank.
  10. Rodrik, Dani, 1987. "Trade and capital-account liberalization in a keynesian economy," Journal of International Economics, Elsevier, vol. 23(1-2), pages 113-129, August.
  11. Brunner, Karl & Meltzer, Allan H., 1982. "Economic policy in a world of change," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 17(1), pages 1-6, January.
  12. Brecher, Richard A. & Bhagwati, Jagdish N., 1982. "Immiserizing transfers from abroad," Journal of International Economics, Elsevier, vol. 13(3-4), pages 353-364, November.
  13. Jeffrey D. Sachs, 1987. "Trade and Exchange Rate Policies in Growth-Oriented Adjustment Programs," NBER Working Papers 2226, National Bureau of Economic Research, Inc.
  14. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  15. Neary, J Peter, 1978. "Short-Run Capital Specificity and the Pure Theory of International Trade," Economic Journal, Royal Economic Society, vol. 88(351), pages 488-510, September.
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Cited by:
  1. Bhattacharya, Rina, 1999. "Capital flight under uncertainty about domestic taxation and trade liberalization," Journal of Development Economics, Elsevier, vol. 59(2), pages 365-387, August.
  2. Philip Arestis, 2003. "Financial Sector Reforms in Developing Countries with Special Reference to Egypt," Economics Working Paper Archive wp_383, Levy Economics Institute, The.
  3. Dollar, David & Svensson, Jakob, 1998. "What explains the success or failure of structural adjustment programs?," Policy Research Working Paper Series 1938, The World Bank.
  4. Siebert, Horst & Schmieding, Holger & Nunnenkamp, Peter, 1991. "The transformation of a socialist economy: lessons of German unification," Kiel Working Papers 469, Kiel Institute for the World Economy.
  5. Laurila, Juhani & Singh, Rupinder, 2000. "Sequential reform strategy: The case of Azerbaijan," BOFIT Discussion Papers 8/2000, Bank of Finland, Institute for Economies in Transition.
  6. Yue Ma, 2008. "Incomplete financial market and the sequence of international trade liberalization," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 13(1), pages 108-117.
  7. Bicaba, Zorobabel, 2011. "Growth and financial reforms trajectory: an optimal matching sequence analysis approach," MPRA Paper 34057, University Library of Munich, Germany.
  8. Schweickert, Rainer, 1994. "Macroeconomic reforms in the Southern cone: lessons for developing and newly emerging market economies," Kiel Working Papers 614, Kiel Institute for the World Economy.
  9. Andrew Newell & Barry Reilly, 1999. "Rates of Return to Educational Qualifications in the Transitional Economies," Education Economics, Taylor & Francis Journals, vol. 7(1), pages 67-84.
  10. Schweickert, Rainer, 1994. "Regional integration: A worthwhile strategy for catching up?," Kiel Working Papers 623, Kiel Institute for the World Economy.
  11. Abbott, Philip & Andersen, Thomas Barnebeck & Tarp, Finn, 2010. "IMF and economic reform in developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 17-26, February.
  12. Battle, Ann Marie, 1997. "Welfare effects of liberalization reforms with distortions in financial and labor markets," Journal of Development Economics, Elsevier, vol. 52(2), pages 279-294, April.
  13. Conley, John P. & Maloney, William F., 1995. "Optimal sequencing of credible reforms with uncertain outcomes," Journal of Development Economics, Elsevier, vol. 48(1), pages 151-166, October.
  14. Siebert, Horst, 1990. "Die Wahlmöglichkeiten einer deutsch-deutschen Geld- und Währungspolitik," Open Access Publications from Kiel Institute for the World Economy 1998, Kiel Institute for the World Economy (IfW).
  15. Siebert, Horst, 1991. "The transformation of Eastern Europe," Kiel Discussion Papers 163, Kiel Institute for the World Economy (IfW).
  16. Cardenas, Mauricio & Barrera, Felipe, 1997. "On the effectiveness of capital controls: The experience of Colombia during the 1990s," Journal of Development Economics, Elsevier, vol. 54(1), pages 27-57, October.
  17. Bhattacharya, Rina, 1997. "Pace, sequencing and credibility of structural reforms," World Development, Elsevier, vol. 25(7), pages 1045-1061, July.

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