The literature on the subject is relatively new, but highlights a number of drivers, in particular economic crises and high unemployment.12 For the EU, the Single Market directives are an important driver of product market reforms.13 Correct sequencing of reforms can also help – product market reforms can facilitate the subsequent implementation of labour market reforms.
By eliminating barriers to entry, procompetition product market reforms can eliminate inefficiencies, in turn promoting higher economic activity and employment, and thereby offsetting possible short-term costs of later labour market reforms. But what about monetary policy? As it turns out, the literature says little about how monetary policy drives the reform process.