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The Short-Term Effects of Structural Reforms: An Empirical Analysis

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  • Romain Bouis
  • Orsetta Causa
  • Lilas Demmou
  • Romain Duval
  • Aleksandra Zdzienicka

Abstract

Drawing on new empirical analysis of 30 years of structural reforms across the OECD, this paper sheds light on the impact of reforms over time, identifies the horizon over which their full effects materialise, and investigates whether such effects vary with prevailing economic conditions and institutions. Impulse responses of aggregate outcomes (GDP growth, employment rate) to various labour, product market and tax reforms are estimated at different horizons. This analysis indicates that the benefits from reforms typically take time to fully materialise. When significant effects are found in the short run, reforms seldom involve significant aggregate economic losses; on the contrary they often deliver some benefits. The absence of major depressing effects does not lend support to the view that reforms should be in general accompanied by substantial macroeconomic policy easing in order to deliver some short-term gains. Nevertheless, there is also tentative evidence that some labour market reforms (e.g. of unemployment benefit systems and job protection) pay off more quickly in good times than in bad times, and can even entail short-term losses in severely depressed economies. L'impact à court terme des réformes structurelles : une analyse empirique Cet article s’appuie sur des données portant sur trente années de reformes structurelles dans les pays de l’OCDE et analyse l’impact de ces reformes au cours du temps. Nous cherchons plus particulièrement à identifier l’horizon temporel à partir duquel ces effets se matérialisent ainsi qu’à déterminer la façon dont le positionnement dans le cycle économique ou les arrangements institutionnels en vigueur dans chaque pays affectent les résultats. L’analyse empirique repose sur l’estimation, à différents horizons temporels, de taux de réponse des variables de performances (taux de croissance du PIB, taux d’emploi) à des reformes mises en oeuvre dans le domaine fiscal, sur le marché du travail ainsi que sur le marché des produits. D’après nos résultats, les effets des reformes mettent généralement du temps à se matérialiser. Lorsque des effets significatifs sont obtenus dès le court terme, l’analyse indique que les réformes ne génèrent que très rarement des coûts macroéconomiques alors qu’un certain nombre d’entre elles produisent rapidement des bénéfices. L’absence d’effet récessif majeur semble donc infirmer l’idée selon laquelle les reformes devraient généralement être accompagnées de politiques macroéconomiques accommodantes permettant de compenser les coûts qui y seraient associés. Cependant, les résultats indiquent également que les effets bénéfiques des réformes du marché du travail (tels que celles du système d’assurance chômage ou de la protection du travail) se matérialisent surtout dans des situations de croissance économique alors qu’une détérioration des performances à court terme peut survenir lorsqu’elles sont appliquées en période de ralentissement économique.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 949.

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Date of creation: 26 Mar 2012
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Handle: RePEc:oec:ecoaaa:949-en

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Cited by:
  1. Boris Cournède & Antoine Goujard & Álvaro Pina, 2013. "How to Achieve Growth- and Equity-friendly Fiscal Consolidation?: A Proposed Methodology for Instrument Choice with an Illustrative Application to OECD Countries," OECD Economics Department Working Papers 1088, OECD Publishing.
  2. Romain Bouis & Ane Kathrine Christensen & Boris Cournède, 2013. "Deleveraging: Challenges, Progress and Policies," OECD Economics Department Working Papers 1077, OECD Publishing.
  3. Tom Krebs & Martin Scheffel, 2013. "Macroeconomic Evaluation of Labor Market Reform in Germany," IMF Working Papers 13/42, International Monetary Fund.
  4. Lusine Lusinyan & Dirk Muir, 2013. "Assessing the Macroeconomic Impact of Structural Reforms The Case of Italy," IMF Working Papers 13/22, International Monetary Fund.
  5. Philip R. Lane, 2013. "Growth And Adjustment Challenges For The Euro Area," The Economic and Social Review, Economic and Social Studies, vol. 44(2), pages 273-295.
  6. Christine Carmody, 2013. "Slowing Productivity Growth - A developed economy," Economic Roundup, Treasury, Australian Government, issue 2, pages 57-78, December.
  7. Heylen, Freddy & Hoebeeck, Annelies & Buyse, Tim, 2013. "Government efficiency, institutions, and the effects of fiscal consolidation on public debt," European Journal of Political Economy, Elsevier, vol. 31(C), pages 40-59.
  8. Bruno Albuquerque & Cristina Manteu, 2012. "On International Policy Coordination and the Correction of Global Imbalances," Working Papers w201214, Banco de Portugal, Economics and Research Department.

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