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Short-run effects of product markets’ deregulation: a more productive, more efficient and more resilient economy?

Listed author(s):
  • Ana Gouveia

    ()

    (GPEARI - Research and Economic Policy Division)

  • Sílvia Santos
  • Gustavo Monteiro
Registered author(s):

    This paper assesses the short-term impact of product market deregulation in upstream sectors on the productivity growth of firms in downstream sectors (i.e. those firms using the output of the reformed sectors as inputs in their production process). Relying on a firm level database for the period 2004-2014 covering all Portuguese firms, we show that the most productive firms - those at the sectoral technological frontier - grasp short-run benefits from these reforms, which are then spread to the other existing firms via spillover mechanisms. In addition, reforms potentiate the exit of the least productive firms, improving the resource allocation in the economy. Finally, we show that the adoption of product market reforms in upstream sectors leads to a more resilient economy, better equipped to face adverse shocks.

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    File URL: http://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_69.pdf
    File Function: First version, 2017
    Download Restriction: no

    Paper provided by Gabinete de Estratégia e Estudos, Ministério da Economia in its series GEE Papers with number 0069.

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    Length: 25 pages
    Date of creation: Mar 2017
    Date of revision: Mar 2017
    Publication status: published
    Handle: RePEc:mde:wpaper:0069
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    1. Renaud Bourlès & Gilbert Cette & Jimmy Lopez & Jacques Mairesse & Giuseppe Nicoletti, 2013. "Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1750-1768, December.
    2. Era Dabla-Norris & Si Guo & Vikram Haksar & Minsuk Kim & Kalpana Kochhar & Kevin Wiseman & Aleksandra Zdzienicka, 2015. "The New Normal; A Sector-level Perspective on Productivity Trends in Advanced Economies," IMF Staff Discussion Notes 15/3, International Monetary Fund.
    3. Jens Arnold & Natália Barbosa, 2015. "Structural policies and productivity: Evidence from Portuguese firms," OECD Economics Department Working Papers 1259, OECD Publishing.
    4. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters,in: New Developments in Productivity Analysis, pages 303-372 National Bureau of Economic Research, Inc.
    5. Eggertsson, Gauti & Ferrero, Andrea & Raffo, Andrea, 2014. "Can structural reforms help Europe?," Journal of Monetary Economics, Elsevier, vol. 61(C), pages 2-22.
    6. Guglielmo Barone & Federico Cingano, 2011. "Service Regulation and Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, vol. 121(555), pages 931-957, September.
    7. Jacques Pelkmans & Lourdes Acedo Montoya & Alessandro Maravalle, 2008. "How product market reforms lubricate shock adjustment in the euro area," European Economy - Economic Papers 2008 - 2015 341, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Sergi Lanau & Petia Topalova, 2016. "The Impact of Product Market Reforms on Firm Productivity in Italy," IMF Working Papers 16/119, International Monetary Fund.
    9. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    10. Bibek Adhikari & Romain A Duval & Bingjie Hu & Prakash Loungani, 2016. "Can Reform Waves Turn the Tide? Some Case Studies Using the Synthetic Control Method," IMF Working Papers 16/171, International Monetary Fund.
    11. Luc Everaert & Werner Schule, 2008. "Why It Pays to Synchronize Structural Reforms in the Euro Area Across Markets and Countries," IMF Staff Papers, Palgrave Macmillan, vol. 55(2), pages 356-366, June.
    12. Romain Bouis & Orsetta Causa & Lilas Demmou & Romain Duval & Aleksandra Zdzienicka, 2012. "The Short-Term Effects of Structural Reforms: An Empirical Analysis," OECD Economics Department Working Papers 949, OECD Publishing.
    13. Romain Duval & Jørgen Elmeskov & Lukas Vogel, 2007. "Structural Policies and Economic Resilience to Shocks," OECD Economics Department Working Papers 567, OECD Publishing.
    14. Emanuele Forlani, 2012. "Competition in Services and Efficiency of Manufacturing Firms:Does “Liberalization” Matter?," LICOS Discussion Papers 31112, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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