What can we expect from structual reforms ? The importance of market interactions and specific investments for the impact of policy changes on economic performance

The impact of structural reforms is considered using a double-sided matching process on Þnancial and labor markets. Firms have to search for both Þnancial investors and workers to produce output whose value is endogenous as all three actors can proceed on investments speciÞc to the match. Financial investors will monitor entrepreneurs, Þrms will select their technology and workers will decide upon their effort level. In equilibrium, when wages and debt levels are negotiated, this may lead to multiple equilibria presenting important structural differences. In particular, they will react differently to similar changes in structural policies such as product or Þnancial market deregulation as can be demonstrated numerically.