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International organizations and the political economy of reforms
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We develop a simple dynamic model of policy reform that captures some of the determinants that underlie the differences between the reform paths taken by a number of countries since the early 1990s. The model focuses on the interaction between domestic institutions and international organizations that promote reform, on the one hand, and the political incentives for reversing reforms, on the other. At equilibrium, there are three types of reform paths. A country can undergo a full-scale, lasting reform, can carry out a partial but lasting reform, or can go through cycles of reforms and costly counter-reforms. Domestic institutions, along with the incentives provided by international organizations, determine the equilibrium path. A politically myopic international organization may induce cycles of reforms and costly counter-reforms, thereby reducing the country's well-being. An international organization that only provides funds to promote reforms may have a less beneficial effect than one that assists the country with fresh funds to defend reforms when there is a risk of reversal. International funds that promote reforms can also influence domestic institutions. For example, due to the intervention of an international organization, countries could have incentives to dismantle institutions that build up reversal cost and/or do not fully build their fiscal capacity.
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MPRC People
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Sebastian Galiani, Ph.D.
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Sebastian Galiani Publications
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Job creation linked to company age, not size
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Faculty Associate John Haltiwanger's paper with two Census Bureau economists challenges conventional wisdom
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Research
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Selected Research
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John Haltiwanger cited on NPR's Morning Edition
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Job creation happens more often in young businesses, not small businesses
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News
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John Haltiwanger featured in Barron's on New Economic Indicators during COVID-19 Pandemic
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Two new indicators designed to gauge economic activity on a real-time basis show that the U.S. has already experienced an economic crisis sharper than the 2008 recession and continues to deteriorate.
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News
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John Haltiwanger featured in The Wall Street Journal on Job Loss during COVID-19
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When fewer firms open, it can weigh heavily on the job market.
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News
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John Haltiwanger receives prestigious award in economics
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Shiskin Award is "a fitting tribute" to Haltiwanger's work
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News
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Judith Hellerstein, Economics
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Social Capital and Labor Market Networks
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Coming Up
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Karthik Muralidharan, University of California San Diego
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Title TBA
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Coming Up
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Katharine Abraham cited in job sharing feature
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Benefits of Work Sharing programs
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News
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Katharine Abraham comments on Misleading Economic Data during COVID-19 on The New York Times
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The tools we have to understand what is happening to the economy are becoming distorted or harder to interpret.
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News