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In 2003-05 the German government implemented a number of far-reaching labor market reforms y the so-called Hartz reforms. At the heart of the reform package was the Hartz IV law, which resulted in a significant cut in the unemployment benefits for the long-term unemployed. The paper develops a macroeconomic model with search and incomplete markets, calibrates the model economy to German data and institutions, and uses the calibrated model economy to simulate the effects of the Hartz reforms, and in particular Hartz IV, on the German labor market. The paper finds that the Hartz IV reform reduced the noncyclical unemployment rate in Germany by 1.4 percentage points. Employed workers benefited from the Hartz IV reform in welfare terms, but unemployed workers lost. It further finds that the Hartz I—III reforms reduced the noncyclical unemployment rate in Germany by 1.5 percentage points. Finally, the authors' analysis suggests that the Hartz reforms contributed to the good performance of the German labor market during the Great Recession.

A new data set of on openness indicators and trade liberalization dates allows the 1995 Sachs and Warner study on the relationship between trade openness and economic growth to be extended to the 1990s. New evidence on the time paths of economic growth, physical capital investment, and openness around episodes of trade policy liberalization is also presented. Analysis based on the new data set suggests that over the 1950–98 period, countries that liberalized their trade regimes experienced average annual growth rates that were about 1.5 percentage points higher than before liberalization. Postliberalization investment rates rose 1.5–2.0 percentage points, confirming past findings that liberalization fosters growth in part through its effect on physical capital accumulation. Liberalization raised the average trade to GDP ratio by roughly 5 percentage points, suggesting that trade policy liberalization did indeed raise the actual level of openness of liberalizers. However, these average effects mask large differences across countries.

We analyze intergenerational redistribution in emerging economies with the aid of an overlapping generations model with endogenous labor supply. Growth is initially high but declines over time. A version of the model calibrated to China is used to analyze the welfare effects of alternative pension reforms. Although a reform of the current system is necessary to achieve financial sustainability, delaying its implementation implies large welfare gains for the (poorer) current generations, imposing only small costs on (richer) future generations. In contrast, a fully funded reform harms current generations, with small gains to future generations.

This paper argues that the European Union (EU) has gone further than any other country or institution in internalising the prescriptions of the Washington Consensus. Embedding neoliberal principles in the treaties defining its governance, the EU has enshrined a peculiar doctrine within its constitution. We further argue that this 'Berlin—Washington Consensus' has serious empirical and theoretical flaws, as its reliance on Pareto optimality leads to neglect the crucial links between current and potential growth. We show by means of a simple model that the call for structural reforms as an engine for growth may be controversial, once current and potential output are related. We claim that adherence to the Consensus may go a long way in explaining the poor growth performance of the European economy in the past two decades, because of the constraints that it imposed on fiscal and monetary policies. The same constraints have deepened the eurozone crisis that started in 2009, putting unwarranted emphasis on austerity and reform. Challenging the Consensus becomes a precondition for avoiding the implosion of the euro and recovering growth.

A companion to the bestseller, The Impact of Economic Policies on Poverty and Income Distribution, this title deals with theoretical challenges and cutting-edge macro-micro linkage models. The authors compare the predictive and analytical power of various macro-micro linkage techniques using the traditional RHG approach as a benchmark to evaluate standard policies, such as, a typical stabilization package and a typical structural reform policy.

The Nigerian government has introduced various macroeconomic reforms, policies and programmes that are not consistent and have not yielded the desired result, given the high unemployment rate. This study investigates macroeconomic reforms on labour market performance in pre and postreform eras using statistical analysis and Vector Error Correction Model. The findings show that using the 'comparison of the mean employment ratio analysis' between the pre-reform era and post-reform, the macroeconomic reforms targeting key variables have not promoted employment. More so, evidence from the long-run employment equation indicates that employment has a negative relationship with output in the long-run. However, the study shows joint long and short-run causality using employment as a dependent variable. Also, the forecast error shock from government expenditure affects output more than any other variable, with minimal employment effect. Mismanagement of resource is mainly an indicator of a fundamental weakness in policies and institutions. Therefore, to improve the situation, the study suggests that among others, strengthening fiscal capacities and institutions to ensure the restructuring of property rights and to ensure political stability regarding economic reforms..

France’s 1998 implementation of the 35‐hour workweek has been one of the greatest regulatory shocks on labor markets. Few studies evaluate the impact of this regulation because of a lack of identification strategies. For historical reasons due to the way Alsace‐Moselle was returned to France in 1918, the implementation of France’s 35‐hour workweek was less stringent in that region than in the rest of the country, which is confirmed by double and triple differences. Yet it shows no significant difference in employment with the rest of France, which casts doubt on the effectiveness of this regulation.

Why are some countries more successful at carrying out postconflict reconstruction programs than are others? Sierra Leone and Liberia have similar histories and suffered wars that were intimately linked. When the wars ended, foreign-backed efforts were undertaken to reform the security sector in each country. These reforms were more successful in Sierra Leone than in Liberia. This article argues that the diverging outcomes are explained by the extent to which postconflict regimes reflected the distribution of power on the ground in the two countries. Sierra Leone's transition regime better reflected the distribution of power among forces on the ground, which led to a consultative approach to framing the reform program. The input of key local actors in policy formulation has made implementation of these reforms less difficult. In Liberia the transition regime was built on a repudiation of local power realities leading to a nonconsultative approach to reform that has severely compromised the implementation of reforms.

At issue is why, despite similar reform packages, the Russian entrepreneurial response has been weaker than the Polish entrepreneurial response. Using a pilot survey of shop managers conducted in Moscow and Warsaw in the spring of 1996, it is argued that a key reason for this outcome is that there are very different relationships between government and business in the two countries. In the survey, questions were asked about the legal and regulatory environment in both cities. It was found that the regulatory, and to some extend the legal, environment is a good deal friendlier to business in Warsaw than in Moscow.

Economic reform is sometimes seen as damaging to a government's re-election chances, but anecdotal evidence from OECD countries would not seem to strongly support this perception. This paper tests this hypothesis on a sample of 21 OECD countries over the penod 1985—2003, controlling for other economic and political factors that may affect re-election. It is found that the chances of re-election for incumbent governments are not significantly affected by their record of pro-market reforms. However, the electoral impact of reform is found to differ strongly depending on which types of policies are considered. In particular, reform measures that are more likely to hurt large groups of 'insiders' seem electorally more damaging. A series of framework conditions appears to affect the impact of reforms on re-elections. Reformist governments in countnes with rigid product and labour markets tend to be voted out of office, suggesting the existence of a 'rigidity trap'. While fiscal stimulus is not an effective instrument to 'sweeten the pill' and raise the odds of re-election, the presence of liberal financial markets appears to soften electoral resistance to structural reform. The latter finding is of particular relevance in the current financial crisis: forward-looking governments should not rush to over-regulate financial markets in order not to compromise the feasibility of product and labour market reforms.