TY  - JOUR
AU  - Asturias, Jose
AU  - Hur, Sewon
AU  - Kehoe, Timothy J
AU  - Ruhl, Kim J
TI  - The Interaction and Sequencing of Policy Reforms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 21840
PY  - 2016
Y2  - January 2016
DO  - 10.3386/w21840
UR  - http://www.nber.org/papers/w21840
L1  - http://www.nber.org/papers/w21840.pdf
N1  - Author contact info:
Jose Asturias
Georgetown University SFS-Q
Education City
P.O. Box 23689
Doha, Qatar
E-Mail: jga35@georgetown.edu

Sewon Hur
Federal Reserve Bank of Cleveland
Research Department
1455 E 6th St
Cleveland, OH 44114
E-Mail: sewonhur@gmail.com

Timothy J. Kehoe
University of Minnesota
Department of Economics
1925 Fourth Street South
Minneapolis, MN 55455-0462
Tel: 612/625-1589
Fax: 612/204-5515
E-Mail: tkehoe@umn.edu

Kim J. Ruhl
Department of Economics
University of Wisconsin-Madison
7444 Social Science Building
1180 Observatory Drive
Madison, WI 53706
E-Mail: ruhl2@wisc.edu
AB  - 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.
ER  -