BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 13/2007:
Does reform work? An econometric examination of the reform-growth puzzle
Ian Babetskii and Nauro F. Campos ()
Abstract: Why are socially beneficial reforms not implemented? One
simple answer to this question (which has received little attention in the
literature) is that this may be caused by generalised uncertainty about the
effectiveness of reforms. If agents are unsure about whether a proposed
reform will work, it will be less likely to be adopted. Despite the
numerous benefits economists assign to structural reforms, the empirical
literature has thus far failed to establish a positive and significant
effect of reforms on economic performance. We collect data from 43
econometric studies (for more than 300 coefficients on the effects of
reform on growth) and show that approximately one third of these
coefficients is positive and significant, another third is negative and
significant, and the final third is not statistically significant different
from zero. In trying to understand this remarkable variation, we find that
the measurement of reform and controlling for institutions and initial
conditions are main factors in decreasing the probability of reporting a
significant and positive effect of reform on growth.
Keywords: structural reforms; economic growth; transition; meta-analysis; (follow links to similar papers)
JEL-Codes: C49; O11; P21; (follow links to similar papers)
45 pages, June 26, 2007
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
dp1307.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Päivi Määttä ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
