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      Charting the Course: Total Factor Productivity Trends in Croatia Post-pre-bankruptcy Act

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      LeXonomica
      University of Maribor

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          Abstract

          The synthetic control method (SCM) is a valuable tool for unbiased pre-bankruptcy reform analysis in economic policy evaluations. This study utilizes SCM to assess the impact of the Financial Operations and Pre-Bankruptcy Settlement Act (AFOPBS) on Croatia's total factor productivity (TFP). Control units and weights were meticulously chosen to construct a synthetic control for Croatia, creating a counterfactual scenario for the reform's absence. The policy's impact was quantified by comparing TFP growth post-policy between Croatia and its synthetic control. Placebo tests confirmed the results' significance, and further validation was achieved through panel difference-in-differences analysis (PDID). Our findings show that the pre-bankruptcy reform in late 2012 effectively reduced the gap between Croatia and its synthetic control throughout the post-treatment years. However, it had two short-term adverse impacts and a subsequent recovery-like phase. These effects were statistically significant and confirmed by cross-validation. In conclusion, Croatia's pre-bankruptcy reform significantly influenced TFP volatility, highlighting SCM's effectiveness in evaluating economic policies, especially those crucial for economic growth

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          Author and article information

          Journal
          LeXonomica
          lexonomica
          University of Maribor
          1855-7155
          1855-7147
          December 06 2023
          December 06 2023
          : 15
          : 2
          : 189-212
          Article
          10.18690/lexonomica.15.2.189-212.2023
          2a7166b8-e7fe-45cb-b9cf-f5ae606bf1c8
          © 2023
          History

          International economics & Trade,General law,Commercial law & legal protection,Law,Business & Corporate economics,Economics

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