ABSTRACT
Balancing adjustment policies and structural reforms during a crisis is a delicate act. While both may be necessary, balancing their respective intensity and scope and their relative timing and sequencing is a crucial factor for ensuring their complementarity and avoiding the former working against the latter. The present paper examines the impact of structural reforms in the business environment and product markets implemented in Greece in recent years, while controlling for the effects of fiscal consolidation and internal devaluation measures implemented during the same period. We try to identify whether, when and how reforms like OECD’s product market toolkit, which comprised more than 300 measures, new start-up business procedures and lower capital requirements affected prices and employment. We take into account adjustment measures like increases in VAT and special consumption taxes, reduction of minimum wages and relaxation of employment protection, as well as other determinants of the economic climate. To uncover the dynamics of these effects, we rely on model selection methods that identify the time lags of the measures. These help us identify potential design inefficiencies and shape proposals for a more efficient policy mix.
