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The Macroeconomic and Socioeconomic Effects of Structural Reforms in Latin America and the Caribbean

Author

Listed:
  • Antonio David
  • Takuji Komatsuzaki
  • Samuel Pienknagura
Abstract
This paper estimates the macroeconomic effects of market-oriented reforms in Latin America and the Caribbean using the IMF Structural Reform database. We find that large changes in the reform index have positive effects on GDP that exceed 2 percent after five years. Furthermore, reforms boost employment, investment, exports, and imports and reduce export concentration, in addition to favoring tradable sectors. The evidence on the effects of reforms on business confidence is mixed, and the effects on total factor productivity are positive, but less precisely estimated. Nonetheless, our results also indicate that the effects of reforms have not been uniform across different segments of the population. Our results are robust to the use of an instrumental variables approach that exploits regional waves of reform to deal with endogeneity concerns. These findings bring to the forefront the need to consider accompanying policies to ensure that reforms promote inclusive growth.

Suggested Citation

  • Antonio David & Takuji Komatsuzaki & Samuel Pienknagura, 2022. "The Macroeconomic and Socioeconomic Effects of Structural Reforms in Latin America and the Caribbean," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 115-155, June.
    • Handle: RePEc:col:000425:020341
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Structural reforms; Latin America; macroeconomic effects;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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