Thursday, April 14, 2016

On Structural Reforms

I think one has to be very clear that structural reforms are not a miracle cure. They are hard to get through; the effects are very often uncertain. But given the future that I have described, it is very important to try. Some structural reforms can clearly make a difference, maybe not to the growth rate permanently but at least to the level of output, which means that for some time there will be higher growth. I think given the short-term political costs associated with structural reforms, which is the main reason why you do not see them happening very quickly, I think the challenge is to choose them very carefully rather than have a long list and deliver on none of them.
Olivier Blanchard in April 2015

This is ultimately the problem raised by the idea of structural reform. Because it is a novel idea, and also a novel political practice, we should not be too surprised that our political institutions still seem unprepared to explore all the possibilities it offers. For the present, it is still unclear in what direction we should be moving, even if the need to follow the idea of fundamental economic reform with new mechanisms and structures of political decision-making is now being felt more than ever.
Bruno Macaes - "What are structural reforms?"

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