The Speed of Adjustment and the Sequencing of Economic Reforms: Issues and Guidelines for Policymakers

Policy Sequencing and the Development of Rice Value Chains in Senegal

“…The basic policy-sequencing argument is that there is a widely applicable, clearly identifiable, set of policy and institutional changes which, if implemented in a pre-determined order, will 'optimise' the pace and direction of economic reform (McPherson, 1995). Nsouli et al (2005) (4) reforms are introduced' (p. 766), and conceptually as 'the optimal adjustment path that will maximise the intertemporal social welfare function of a country, subject to financial and structural constraints' (p. 741). However, different authors emphasise the lack of a theoretical basis for deriving optimal sequences of reform (Spooner and Smith, 1991;McPherson, 1995;Cole, 1997).…”

“…However, different authors emphasise the lack of a theoretical basis for deriving optimal sequences of reform (Spooner and Smith, 1991;McPherson, 1995;Cole, 1997). Moreover, the debate is often carried out in a vacuum; typically, concepts are not fully defined, thereby rendering their analyses incomparable (Nsouli et al, 2005). Lacking any theoretical foundation, analysts have no formal basis for determining in advance whether particular sequences of policy changes are 'optimal', or even 'right' (McPherson, 1995).…”

“…Lacking any theoretical foundation, analysts have no formal basis for determining in advance whether particular sequences of policy changes are 'optimal', or even 'right' (McPherson, 1995). As a result, the extensive literature on policy sequencing is inconclusive and often conflicting in the policy advice it provides (Nsouli et al, 2005). In an attempt to embed policy sequencing in a theoretical foundation, Toye (1999) analyses the contribution of welfare economics and political economy to the problem and suggests that policy sequencing may need to be analysed through operational research methods such as critical path analysis (CPA).…”

Growth in transition countries

“…In particular this static specification captures: (i) the output fall due to the process of 'creative destruction' under laisser-faire in a Ramsey-type model; and (ii) the trade-off between short and long run in terms of profitability of reform in the literature on network externalities. Adjustment costs of the reforms have been explored by Nsouli et al (2005) among others.…”

Embracing the Second Best? Synchronization of Reform Speeds, Excess High Discretion Slack, and Performance of Transition Economy Firms

“…These prior country-level studies have debated if reforms are mutually complementary for countries' welfare (Braga de Macedo and Martins, 2008;Nsouli et al, 2005;Rocha, 2009;Staehr, 2005). Some economists have argued that countries pursuing a greater scope of one type of reform enjoy greater welfare gains from simultaneously pursuing a greater scope of another type of reform (Braga de Macedo and Martins, 2008;Chang et al, 2009;Rocha, 2009;Staehr, 2005).…”