Proceedings from the ECFIN Workshop "The budgetary implications of structural reforms" - Brussels, 2 December 2005



Table 8: Budget balances, labour and product market reforms (reform
dummies defined as changes in reform indicators greater than the average
positive change. See table 1 for sample definition)

Dependent variable:
primary CAB
Explanatory variables

(1)

(2)

Constant

-1.42***

-1.61***

(-5.5)

(-5.19)

Lagged dependent

0.75***

0.77***

variable

(22.65)

(23.71)

Output gap

-0.09

-0.06

(-0.2)

(-1.5)

Lagged debt/GDP ratio

0.034***

0.037***

(6.81)

(6.3)

Dummy for labour

-0.45**

market reforms

(-2.13)

Dummy for product

-0.35*

market reforms

(-1.84)

N. obs.

330

291

R sq.

0.72

0.76

Chi sq

1005

1163

Notes: Estimations method: fixed effects, instrumental variables
regression. The output gap is instrumented with its own lag and the US
lagged output gap. All fiscal variables are expressed as shares on
potential output.

Z statistics are reported in parentheses. *, **, and *** denote,
respectively, significance at the 10, 5 and 1 per cent level.
Coefficients for country fixed effects are not reported.

Source: Authors’ calculation on data described in table 1 and DG ECFIN
AMECO database.

126



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