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Growth and structural reforms: A new assessment

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  • Christiansen, Lone
  • Schindler, Martin
  • Tressel, Thierry

Abstract

This paper presents a simultaneous assessment of the relationship between economic performance and three groups of economic reforms: domestic finance, trade, and the capital account. Domestic financial reforms and trade reforms are robustly associated with economic growth, but only in middle-income countries. In contrast, there is no evidence of a systematic positive relationship between capital account liberalization and economic growth. Moreover, the effect of domestic financial reforms on economic growth in middle-income countries is accounted for by improvements in measured aggregate TFP growth, not by higher aggregate investment. Additional analysis suggests that sufficiently developed property rights are a precondition for reaping the benefits of financial and trade reforms. Our results are robust to endogeneity bias and a number of alternative specifications.

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  • Christiansen, Lone & Schindler, Martin & Tressel, Thierry, 2013. "Growth and structural reforms: A new assessment," Journal of International Economics, Elsevier, vol. 89(2), pages 347-356.
  • Handle: RePEc:eee:inecon:v:89:y:2013:i:2:p:347-356
    DOI: 10.1016/j.jinteco.2012.07.008
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    More about this item

    Keywords

    Economic growth; Liberalization; Domestic finance; Trade; Capital account;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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