The quantification of structural reforms in OECD countries: A new framework

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This document describes and discusses a new supply side framework that quantifies the impact of structural reforms on per capita income in OECD countries. It presents the overall macroeconomic impacts of reforms by aggregating over the effects on physical capital, employment and productivity through a production function. On the basis of reforms defined as observed changes in policies, the paper finds that product market regulation has the largest overall single policy impact five years after the reforms. But the combined impact of all labour market policies is considerably larger than that of product market regulation. The paper also shows that policy impacts can differ at different horizons. The overall long-term effects on GDP per capita of policies transiting through capital deepening can be considerably larger than the 5-to 10-year impacts. By contrast, the long-term impact of policies coming only via the employment rate channel materialises at shorter horizon. Terms of use: Documents inJEL-Codes: D240, E170, E220, E240, J080.

The Economic Consequences of Brexit

“…The trade effects of the UK leaving the EU were obtained by the OECD's METRO model (Box 2) and were fed into the National Institute Global Econometric Model (NiGEM) macro model for the world economy. Egert and Gal (2016) imply that a four percentage points decline in trade openness reduces total factor productivity by 0.8% after five years (and by 1.2% after 10 years). In the NiGEM near-term scenario the impact on productivity of the sharp fall in trade (Box 2) was modelled as a decline in labour-augmenting technical progress building up to 1.6% by 2023.…”

Links between weak investment and the slowdown in productivity and potential output growth across the OECD

“…More narrowly, recent empirical work in the Economics Department suggests that structural reforms which promote competition in product markets tend to boost capital intensity, albeit with long lags (OECD, 2015b;Égert, 2016;and Égert and Gal, 2016). However, while competition-enhancing product market regulation has continued to improve, the rate of improvement has declined in the post-crisis period (Figure 8).…”

Measuring consumer detriment and the impact of consumer policy

“…Triangulation, which involves using two or more sources of data or research methodologies to validate and verify results, may be a useful exercise to undertake with any resulting estimates of consumer detriment. As noted in the European Commission Better Regulation Toolbox (Tool #4)"the application and combination of several research methodologies in the study of the same phenomenon … enhances confidence in results if different methods lead to the same result" (EC, n.d., p. 20 [52]).…”