When the economy is constrained by the zero-lower bound, reforms may even have negative impact by fueling expectations of deflation, which may push up the real interest rate and further depress aggregate demand. Similarly, Cacciatore et al. (2016) showed that although less sensible, product market reforms may have an ambiguous impact due to the interaction with the business cycle Using a sample of large OECD countries, Bordon et al. (2016) focused on labor and product market reforms and found a lagged but positive impact on job creation that remained even after controlling for the endogeneity of the decision to reform. However, the effects of labor market reforms undertaken during periods of economic distress tend to be negative. More recently, Campos et al. (2017) also stressed the importance of timing when assessing the impacts of all kinds of structural reforms. Using firm-level data, de Almeida and Balasundharam (2018) found that structural reforms do have a positive effect on output and employment, particularly over the medium term, but different reforms have different payoffs, with labor market reforms having the least impact. This may be because most labor market reforms had occurred during economic downturns. Aiyar et al. (2019) also discussed the interaction between structural and cyclical policies and showed that structural reforms are needed to enhance the resilience of countries, and the monetary union as a whole. Recently, IMF (2019) demonstrates that some reforms, including easing job protection regulation and liberalizing domestic finance, may entail significant short-term costs if carried out in bad times. In line with other research, this study shows that structural reforms may have less effect on product markets if implemented during periods of significant slack.

Finally, this paper is also related to the literature on the effects of EU accession, with two main views prevailing: (1) EU accession may result in large upfront costs of structural reforms or in reduced incentives to reform, especially for small countries joining the monetary union, as they are unlikely to affect union-wide inflation bias. Duval and Elmeskov (2006) found that indeed countries that have little or no monetary autonomy because they have fixed exchange-rate regimes or participate in a monetary union apparently undertake fewer reforms. (2) EU accession may increase the incentives for structural reforms to facilitate a market-based adjustment to shocks. Moreover, reduced costs of trading, increased mobility of capital, and greater transparency may foster pro-competition regulatory changes. In line with this second view, Dias da Silva et al. (2017) found a positive and robust link between growth and being part of the EU single market. This is actually true for many countries pursuing EU accession (see the recent report on Poland, World Bank Group [2017a]). Aligning with the second view, this study found a positive and robust nexus between EU accession and output growth that mainly worked by boosting capital deepening and productivity as a result of accession to a single market.

## **2. Database and Methodology**

# Database

This paper builds on the database developed by Lusinyan (2018), a large collection of macroeconomic variables and structural indicators for many advanced and emerging economies for the period 1980‒ 2016. The sample varies, however, depending on data availability for countries and variables.

The analysis here, in particular the baseline model (see Section 3), uses a sample of about 50 countries in ECA. The extended model builds instead on a larger set of advanced and emerging economies.

Working with a focused sample of countries ensures greater precision when applying the stochastic frontier approach (SFA) to obtain a proxy for productivity. The SFA in fact, given a sample of 5