included in the dataset used). Table 3 reports the rank correlation coefficients among the reform
indicators across the sample. The coefficients indicate that while the correlation appears very low
among labour market reforms and product market reforms and among labour market reform and
pension reforms, the correlation is quite high (0.14) between product market reforms and pension
reforms, denoting a greater tendency for these two type of reforms to occur at the same time, in the
same country.
Prima-facie evidence on whether the adoption of reforms were negatively associated with fiscal
consolidations can be obtained by comparing across the EU countries included in the sample the
frequency of reforms in years during which there was an improvement in primary cyclically-
adjusted budgets (primary CAB) with that in years in which primary CABs deteriorated. Graph 1
reports such information. The difference is negligible in case of labour market reforms, it is
slightly higher in consolidation years for product market reforms, while in the case of pension
reforms there is a quite substantially higher frequency of reforms in years in which primary CABs
improved (31% of the cases as compared with 22% when a reduction in the primary CAB was
recorded). Overall, prima-facie evidence does not support the view that reforms were less frequent
in year were fiscal consolidations took place. Additional useful prima-facie information on the
link fiscal consolidation and the implementation of reforms is obtained by comparing the
frequency of reforms across the sample before and after the introduction of the EU fiscal
framework. This permits to have a first check on the presumption that the EU framework for fiscal
discipline acts as a constraint on the implementation of reforms. Graph 2 reports data on the
frequency of reforms in the 1990s, separately for the period before and after the start of phase II of
EMU (i.e., 1994). The data suggest that while labour market reforms became less frequent in the
EU countries covered by the sample, after the introduction of the EU fiscal framework, the
opposite holds for product market and pension reforms.
Looking simply at the difference between reform frequencies in years with and without budgetary
consolidation does not permit to take into account the impact that factors different from budgetary
policy had on the timing of the adoption of economic reforms. There are very few attempts to
estimate empirically whether fiscal consolidation has a negative impact on the probability of
carrying out economic reforms controlling for other factors. In IMF (2004), regression analysis on
a panel of advanced countries is performed to assess the impact of alternative determinants of
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