The Impact of Structural Reforms: A Review of the Literature

The Impact of Product and Labour Market Reform on Growth: Evidence for OECD Countries Based on Local Projections

“…For instance, the entry of new competitors may directly encourage productivity growth in incumbent firms (Aghion et al, 2004), while more competition in the markets for intermediate goods allows firms to boost productivity through cheaper inputs (Bourlès et al, 2013). Several studies have examined the impact of product market reform on economic growth, reporting mixed results (see Parlevliet et al, 2018 for a review of the literature).…”

“…2 It is not clear whether labour and product market reforms are substitutes or complements. Following the theoretical work ofBlanchard and Giavazzi (2003), who demonstrated a degree of substitutability between product and labour market regulations in a general equilibrium setting, several studies have investigated this relationship empirically with different outcomes (seeParlevliet et al, 2018). The relationship between both types of reform may also be different in the short and the long run.…”

Structural Reforms and Income Distribution: New Evidence for OECD Countries

“…A substantial part of previous research on the effects of structural reforms uses simulations of Dynamic Stochastic General Equilibrium (DSGE) models (see Parlevliet et al, 2018 for a review). However, Campos et al (2018: 27) argue that "A problem with this approach is that the simulations just confirm a priori beliefs: in most DSGE models, unemployment is voluntary.…”