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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: https://repec.econ.au.dk/repec/afn/wp/03/wp03_14.pdf
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    References listed on IDEAS

    as
    1. 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.
    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. 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.
    4. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    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.
    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. Chambers, Dustin & Collins, Courtney, 2016. "How Do Federal Regulations Affect Consumer Prices? An Analysis of the Regressive Effects of Regulation," Working Papers 06871, George Mason University, Mercatus Center.
    5. 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.
    6. Brandon Pizzola, 2018. "Business regulation and business investment: evidence from US manufacturing 1970–2009," Journal of Regulatory Economics, Springer, vol. 53(3), pages 243-255, June.
    7. Irina I. RAKHMEEVA, 2018. "Controlled Parameters of the System for Assessing the Regulatory Impact of a Region," Upravlenets, Ural State University of Economics, vol. 9(5), pages 48-57, October.
    8. Coffey, Bentley & McLaughlin, Patrick, 2016. "The Cumulative Cost of Regulations," Working Papers 06863, George Mason University, Mercatus Center.
    9. Elena Podrecca, 2013. "Riforme del mercato dei prodotti e crescita della produttivit?. Teoria ed evidenza empirica," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 0(2), pages 10-41.
    10. 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.
    11. Bentley Coffey & Patrick McLaughlin & Pietro Peretto, 2020. "The Cumulative Cost of Regulations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 38, pages 1-21, October.
    12. Dustin Chambers & Courtney A. Collins & Alan Krause, 2019. "How do federal regulations affect consumer prices? An analysis of the regressive effects of regulation," Public Choice, Springer, vol. 180(1), pages 57-90, July.

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    Keywords

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    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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