Assessing the Impact of Structural Reforms Through a Supply-side Framework: The Case of Argentina
IMF Working Papers, August 3, 2018
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- Assessing the Impact of Structural Reforms Through a Supply-side Framework: The Case of Argentina
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Bibliographic details
- Authors: Lusine Lusinyan
- Published: August 3, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484362990.001
Framework and methodology
- Uses a supply-side framework based on a production function approach to assess the role of structural reforms in boosting long-term GDP growth in Argentina.
- Assesses the impact of product, labor, trade, and tax reforms on each supply-side channel separately:
- Capital accumulation
- Labor utilization
- Total factor productivity (proxied with an efficiency estimate)
- Combines channel-specific effects to derive the total impact on GDP growth.
Main findings
- The largest effect of structural reforms comes through the productivity/efficiency channel, particularly from regulatory changes that promote competition and facilitate flexible forms of employment.
- Pro-competition regulation also improves labor utilization.
- Lower entry barriers and lower trade tariffs are important for capital accumulation.
- Structural reforms could have substantial effects on Argentina’s long-term GDP growth.
Quantitative impact example
- An ambitious reform effort to improve business regulatory environment would add 1–1½ percent to average annual growth of GDP.
Policy implications and reform priorities
- Prioritize regulatory reforms that:
- Promote competition across product markets.
- Facilitate flexible forms of employment to raise efficiency.
- Reduce entry barriers and trade tariffs to support capital accumulation.
- Coordinate product, labor, trade, and tax reforms to leverage complementary effects across capital, labor, and productivity channels.
Lusine Lusinyan, IMF Working Paper No. 2018/183 (2018).