NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Interaction and Sequencing of Policy Reforms

Jose Asturias, Sewon Hur, Timothy J. Kehoe, Kim J. Ruhl

NBER Working Paper No. 21840
Issued in January 2016
NBER Program(s):Economic Fluctuations and Growth, International Finance and Macroeconomics, International Trade and Investment

In what order should a developing country adopt policy reforms? Do some policies complement each other? Do others substitute for each other? To address these questions, we develop a two-country dynamic general equilibrium model with entry and exit of firms that are monopolistic competitors. The model includes barriers to entry of new firms, barriers to international trade, and barriers to contract enforcement. We find that the same reform can have very different effects on other economic outcomes, depending on the types of distortions present. In our model, we find that reforms to trade barriers and barriers to the entry of new firms are substitutable, as are reforms to contract enforcement and trade barriers. In contrast, we find that reforms to contract enforcement and the barriers to entry are complementary. Finally, the optimal sequence of reforms requires reforming trade barriers before contract enforcement.

download in pdf format
   (420 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21840

Published: Jose Asturias & Sewon Hur & Timothy J. Kehoe & Kim J. Ruhl, 2016. "The Interaction and Sequencing of Policy Reforms," Journal of Economic Dynamics and Control, . citation courtesy of

Users who downloaded this paper also downloaded* these:
Burchardi, Chaney, and Hassan w21847 Migrants, Ancestors, and Investments
Keller, Andres Santiago, and Shiue w21886 Foreigners Knocking on the Door: Trade in China During the Treaty Port Era
Li and Whalley w21853 The 2008 Financial Crisis and the Lack of Retaliatory Trade Intervention
Costinot, Rodríguez-Clare, and Werning w21989 Micro to Macro: Optimal Trade Policy with Firm Heterogeneity
Murphy and Topel w21841 Human Capital Investment, Inequality and Economic Growth
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us