Growth, Income and Regulation: a Non-Linear Approach
AbstractThis paper analyzes the effect on GDP growth of income (GDP per capita) and economic regulation. A simple theoretical framework presents two opposing views. We analyze the empirical relation using a non-linear dynamic panel data model with fixed effects. The result shows that the effect of regulation on growth depends on income. For low-income countries, there is little effect of changing regulation. For highly regulated middle-income countries, deregulation can increase growth. For high-income countries, deregulation leads to higher growth. Holding regulation constant, there is catch-up growth with a maximum at an intermediate income level.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2005-12.
Length: 19 pages
Date of creation: Aug 2005
Date of revision:
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More information through EDIRC
catch-up growth; economic freedom; fixed effects; GMM; specification tests;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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- Johnson, Paul & Durlauf, Steven N & Temple, Johnathan R. W., 2004.
Vassar College Department of Economics Working Paper Series
61, Vassar College Department of Economics.
- Easton, Stephen T & Walker, Michael A, 1997. "Income, Growth, and Economic Freedom," American Economic Review, American Economic Association, vol. 87(2), pages 328-32, May.
- Luis Costa & Miguel St. Aubyn, 2012. "The Macroeconomic Effects of Legal- Simplification Programmes," Working Papers Department of Economics 2012/12, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
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