Abstract
This article investigates whether membership in the euro area enhances or hampers structural reforms in the regulation of product markets and business environment. It updates the empirical results of the early literature and adds to it by applying new indicators for structural reforms. By estimating a dynamic panel data model with the system generalized method of moments, I find that euro-area countries deregulate significantly more than other OECD countries in product markets. This result is confirmed applying the longer panel for network sector regulation. However, I do not find any evidence for reforms in business regulation that would ease doing business in a cross-section analysis. (JEL codes: F33, F36, L50)
Highlights
Prior to the creation of the euro area, there was a lively debate among scholars whether the euro would hamper or speed up structural reforms in the regulation of product and labour markets
20 March 2018 Abstract: This paper investigates whether membership in the euro area enhances or hampers structural reforms in the regulation of product markets and business environment
Since 2001 the OECD constructs the gross replacement rate calibrated to the Average Worker (AW) wage, since data on the Average Production Worker (APW) wage have not been collected by the OECD since 2005 (OECD 2014b)
Summary
This paper investigates whether membership in the euro area enhances or hampers structural reforms in the regulation of product markets and business environment. It updates the empirical results of the early literature and adds to it by applying new indicators for structural reforms. By estimating a dynamic panel data model with system GMM, I find that euro-area countries deregulate significantly more than other OECD countries in product markets. This result is confirmed applying the longer panel for network sector regulation.
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