02224cas a2200289 a 4500 AALejournalIMF021385 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513563909 1018-5941 BD-DhAAL BD-DhAAL Hellwig, Klaus-Peter. Identifying Reform Priorities : The Role of Non-linearities / Klaus-Peter Hellwig. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (22 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Can countries improve their business climate through reforms in specific policy areas? Kraay and Tawara (2013) find that the answer depends on how we measure the business climate. When regressing seven different business climate indices on 38 policy indicators, they find little agreement among the seven models as to which of those policy indicators matter most. I revisit this puzzle using the same data but replacing their linear models with a Random Forest algorithm. I find a strong consensus across models on the importance ranking of policy indicators: No matter which business climate index is considered, the top ten contributors to a better business climate always include high recovery rates in insolvency proceedings (i.e., cents on the dollar for creditors), shorter border formalities for both importers and exporters, and low costs for starting a business. I show that the marginal effect of reforms is heterogeneous across countries and document how reform priorities depend on country specific circumstances. Mode of access: Internet Business Climate imf Random Forest imf Shapley Values imf Structural Reforms imf IMF Working Papers; Working Paper ; No. 2020/278 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/278/001.2020.issue-278-en.xml IMF e-Library