TY - JOUR

T1 - The Inverse Domino Effect

T2 - Are Economic Reforms Contagious?*

AU - Gassebner, Martin

AU - Gaston, Noel

AU - Lamla, Michael J.

PY - 2011/2/24

Y1 - 2011/2/24

N2 - This article examines whether a country's economic reforms are affected by reforms adopted by other countries. Our theoretical model predicts that reforms are more likely when factors of production are internationally mobile and reforms are pursued in other economies. Using the change in the Index of Economic Freedom as the measure of market-liberalizing reforms and panel data (144 countries, 1995-2006), we test our model. We find evidence of the spillover of reforms. Moreover, consistent with our model, international trade isnota vehicle for the diffusion of economic reforms; rather the most important mechanism is geographical or cultural proximity.

AB - This article examines whether a country's economic reforms are affected by reforms adopted by other countries. Our theoretical model predicts that reforms are more likely when factors of production are internationally mobile and reforms are pursued in other economies. Using the change in the Index of Economic Freedom as the measure of market-liberalizing reforms and panel data (144 countries, 1995-2006), we test our model. We find evidence of the spillover of reforms. Moreover, consistent with our model, international trade isnota vehicle for the diffusion of economic reforms; rather the most important mechanism is geographical or cultural proximity.

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=79951900930&partnerID=8YFLogxK

U2 - 10.1111/j.1468-2354.2010.00624.x

DO - 10.1111/j.1468-2354.2010.00624.x

M3 - Journal articles

AN - SCOPUS:79951900930

VL - 52

SP - 183

EP - 200

JO - International Economic Review

JF - International Economic Review

SN - 0020-6598

IS - 1

ER -