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Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle

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  • Ian Babetskii
  • Nauro F. Campos

Abstract

Despite the many benefits associated with structural reforms, the literature has thus far failed to establish a positive significant effect of reforms on growth. Using data from 43 econometric studies, we show that one third of the coefficients (of reform on growth) are positive and significant, another third are negative and significant, and the final third are not statistically significant. In trying to understand this remarkable variation, we find that the measurement of reform and controlling for institutions and initial conditions are the main factors in decreasing the probability of reporting a significant and positive effect of reform on growth.

Suggested Citation

  • Ian Babetskii & Nauro F. Campos, 2007. "Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle," Working Papers 2007/2, Czech National Bank.
  • Handle: RePEc:cnb:wpaper:2007/2
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    More about this item

    Keywords

    Growth; liberalisation; structural reforms; transition.;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other

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