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How does Public Regulation affect Growth?

Author

Listed:
  • Goergens, Tue
  • Paldam, Martin
  • Würtz, Allan

    () (Department of Economics Aarhus, Denmark)

Abstract

Public regulations can increase economic growth by correcting market faults and decrease growth by consuming resources and reducing incentives. A simple theoretical framework is developed to represent commonly held views on the relationship between growth an regulation. The relationship is possibly non-linear with some level of regulation being optimal. We estimate the relation by a fixed effect non-linear panel data regression model using a new semi-parametric estimator. The outcome shows that the relationship indeed may be non-linear: High levels of regulation lowers growth, but there is no effect on growth for moderate to low levels of regulation.

Suggested Citation

  • Goergens, Tue & Paldam, Martin & Würtz, Allan, "undated". "How does Public Regulation affect Growth?," Economics Working Papers 2003-14, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2003-14
    as

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    File URL: ftp://ftp.econ.au.dk/afn/wp/03/wp03_14.pdf
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    References listed on IDEAS

    as
    1. Skott, Peter, 2005. "Fairness as a source of hysteresis in employment and relative wages," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 305-331, July.
    2. Holler, Manfred & Skott, Peter, "undated". "The importance of setting the agenda," Economics Working Papers 2003-8, Department of Economics and Business Economics, Aarhus University.
    3. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    4. Dell'Anno, Roberto, "undated". "Estimating the Shadow Economy in Italy: a Structural Equation Approach," Economics Working Papers 2003-7, Department of Economics and Business Economics, Aarhus University.
    5. Andersen, Torben M., "undated". "The Macroeconomic Policy Mix in a Monetary Union with Flexible Inflation Targeting," Economics Working Papers 2003-2, Department of Economics and Business Economics, Aarhus University.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Henrik Christoffersen & Martin Paldam, 2004. "Privatization in Denmark, 1980-2002," CESifo Working Paper Series 1127, CESifo Group Munich.
    2. Jensen, Peter Sandholt & Paldam, Martin, "undated". "Can the new aid-growth models be replicated," Economics Working Papers 2003-17, Department of Economics and Business Economics, Aarhus University.
    3. Anabel Zárate-Marco & Jaime Vallés-Giménez, 2012. "The cost of regulation in a decentralized context: the case of the Spanish regions," European Journal of Law and Economics, Springer, vol. 33(1), pages 185-203, February.
    4. Elena Podrecca, 2013. "Riforme del mercato dei prodotti e crescita della produttività. Teoria ed evidenza empirica," ECONOMIA E SOCIETÀ REGIONALE, FrancoAngeli Editore, vol. 2013(2), pages 10-41.
    5. Monika Marcinkowska, 2013. "Regulation and self-regulation in banking: in search of optimum," Bank i Kredyt, Narodowy Bank Polski, vol. 44(2), pages 119-158.
    6. Mario Andrés Pinzón, 2016. "Prácticas para mejorar la regulación en Colombia," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 18(35), pages 207-228, July-Dece.

    More about this item

    Keywords

    Fixed effects; growth; semi-parametric regression; panel data; public regulation;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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