“…While country fixed effects capture a wide array of unobserved characteristics that are fixed in time, researchers sometimes include time-varying explanatory variables accounting for institutional features and the quality of the political system (i.e., measures of impartiality, bureaucratic quality, corruption), judicial and labour market indicators, and economic indicators measuring the involvement of the government in the economy (see Bortolotti et al, 2013;Grajek and Roller, 2012;Gugler et al, 2013;Koo et al 2012;Wallsten, 2001). Two examples are the Fraser index of economic freedom (see e.g., Polemis, 2016;Polemis and Stengos, 2017;Zhang et al, 2018;Agiakloglou and Polemis, 2018;Gwartney et al, 2012) and measures of investors' protection (Bortolotti et al, 2013). Alternatively, interactions between regulatory reform proxies and indicators of institutional quality could be useful to understand how the effectiveness of reforms varies with countries' institutional quality (see e.g., Borghi et al, 2016;Estache et al, 2006).…”