de Castro, Alexandre SamyGoldin, IanPereira da Silva, Luiz A.2014-08-012014-08-012002-10https://hdl.handle.net/10986/19222The authors aim at contributing to understand the dispersion of returns from policy reforms using cross-country regressions. The authors compare the "before reform" with "after reform" GDP growth outcome of countries that undertook import-liberalization and fiscal policy reforms. They survey a large sample (about 54) of developing countries over the period 1980-99. The benefits of openness to trade and fiscal prudence have been extensively identified in the growth literature, but the evidence from simple cross-section analysis can sometimes be inconclusive and remains vulnerable to criticism on estimation techniques, such as identification, endogeneity, multi-colinearity, and the quality of the data. The authors use a different analytical framework that establishes additional controls. First, they construct a counterfactual control group. These are countries that-under specific thresholds-did not introduce policy reforms under scrutiny. Second, the authors also try to use the most appropriate variable of policy reform, for example, exogenous changes in import-tariffs instead of the endogenous sum of all trade flows. Third, the authors try to base the before-after reform comparison on the most accurate date for the beginning of a policy reform period (instead of comparing averages over fixed intervals of time). Once these controls are set, they explain the difference between average GDP growth rates during the country-specific post and the pre-reform periods, relative to the average GDP growth of the relevant control group. The explanatory variables in the regressions include the standard growth-regression controls. The results are the following: 1) With a better measurement and timing of the policy reforms, the growth effect (the "returns on reform") is generally smaller than in previous papers. 2) There is evidence of contingent relationships between policy and growth, corresponding to the country's size, its export profile, and its governance. 2) Within the group of policy reformers, some countries have exhibited a relatively weaker growth response. Overall, the findings suggest that more accurate measurement and definition of the timing of reforms does not strengthen the significance of the effects of reforms on GDP growth. In fact, the effects are weaker than indicated in most cross-section studies. This suggests that the policy implications to be derived from these relationships should be treated with even more caution than previously thought.CC BY 3.0 IGOAGRICULTURAL EXPORTSAGRICULTURAL PRODUCTSAGRICULTUREANDEAN PACTANTIDUMPINGAVERAGE GROWTHAVERAGE GROWTH RATEAVERAGE TARIFFAVERAGE TARIFF RATEAVERAGE TARIFF RATESAVERAGE TARIFFSAVERAGE TRADEBALANCE OF PAYMENTSBALANCE OF PAYMENTS CRISISBARRIERS TO IMPORTSBLACK MARKETBLACK MARKET PREMIUMCAPITAL ACCOUNTCAPITAL ACCUMULATIONCAPITAL STOCKCDCOMPARATIVE ADVANTAGECOMPLEX TASKCONCESSIONSCONSUMPTION EXPENDITURESCOUNTRY CHARACTERISTICSCOUNTRY REGRESSIONSCOUNTRY SIZECROSS- COUNTRY ANALYSISCROSS- COUNTRY VARIATIONCROSS-COUNTRY ANALYSISCROSS-COUNTRY REGRESSIONSCURRENCYCUSTOMSCUSTOMS UNIONDATA AVAILABILITYDEBTDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT INDICATORSECONOMIC GROWTHECONOMIC POLICYEMPIRICAL EVIDENCEEQUATIONSESTIMATED COEFFICIENTSESTIMATION METHODESTIMATION TECHNIQUESEXCHANGE RATEEXOGENOUS SHOCKEXOGENOUS SHOCKSEXPENDITURESEXPLANATORY VARIABLESEXPORT SHARESEXPORTERSEXPORTSEXTERNAL DEBTEXTERNAL SHOCKSFACTORS OF PRODUCTIONFINANCIAL LIBERALIZATIONGDPGDP PER CAPITAGLOBAL TRADEGROWTH EFFECTGROWTH LITERATUREGROWTH PERFORMANCEGROWTH RATEGROWTH RATESGROWTH REGRESSIONSHIGH INCOME COUNTRIESHIGH TARIFFSHUMAN CAPITALIDIOSYNCRATIC SHOCKSIMPORT DUTIESIMPORT LIBERALIZATIONIMPORT TARIFFSINCOMEINCREASE GROWTHINCREASING MARKET ACCESSINFLATIONINVESTMENT RATEINVESTMENT RATESLAGGED GROWTHLONG- RUN GROWTHMACRO POLICYMACROECONOMIC CONDITIONSMACROECONOMIC POLICYMARGINAL COSTMARGINAL EFFECTMARGINAL EFFECTSMARKET ACCESSNEGATIVE EFFECTNEGATIVE IMPACTNON-TARIFF BARRIERSOPEN ECONOMIESOPENNESSOPENNESS TO IMPORTSPOLICY ANALYSISPOLICY IMPLICATIONSPOLICY INSTRUMENTSPOLICY REFORMPOLICY REFORMSPOLICY RESEARCHPOLICY VARIABLESPRIMARY EDUCATIONPRIMARY PRODUCTSPRODUCTION FUNCTIONPRODUCTIVITYPUBLIC INVESTMENTPUBLIC POLICIESQUOTASREAL INTEREST RATESREDUCED FORM EQUATIONREGIONAL TRADEREGIONAL TRADE BLOCSREGIONAL TRADE SHARESREGULATORY FRAMEWORKSAVINGSSIGNIFICANT REDUCTIONSTANDARD DEVIATIONSTANDARD GROWTH DETERMINANTSTARIFF BARRIERSTARIFF RATETARIFF RATESTARIFF REDUCTIONTAX REVENUESTAX SYSTEMTERMS OF TRADETERMS OF TRADE SHOCKSTOTAL FACTOR PRODUCTIVITYTRADE BARRIERSTRADE BLOCTRADE BLOCSTRADE CONTROL MEASURESTRADE DIVERSIONTRADE DIVERSION EFFECTTRADE FLOWTRADE FLOWSTRADE INTENSITYTRADE LIBERALIZATIONTRADE OPENNESSTRADE POLICIESTRADE POLICYTRADE POLICY REVIEWTRADE POLICY VARIABLESTRADE REFORMTRADE REGIMETRADE RESTRICTIONSTRADE SHARETRADE TAXESUNDERESTIMATESURUGUAY ROUNDWORLD TRADEWTOPOLICY REFORMCROSS-COUNTRY EXPERIENCEGROSS DOMESTIC PRODUCTGROWTH PATTERNSIMPORT LIBERALIZATIONFISCAL POLICYPRUDENTIAL REGULATIONSVARIABILITYIMPORT TARIFFSTRADE FINANCEREGRESSIVE TAXESGOVERNANCE CAPACITY10.1596/1813-9450-2898