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Deregulation, Economic Growth and Growth Acceleration

  • Petar Stankov

The paper analyzes the influence of credit-, labor-, and product market deregulation policies on economic growth in more than 70 economies over a period of 30 years. It addresses both the issues of reform measurement and its endogeneity. Specifically, by combining a difference-in-difference strategy with an IV approach to the endogeneity of the reform timing, this work finds that deregulation contributed to the per capita GDP levels of the early reformers relatively more than to the ones of the late reformers. However, the paper also finds that accelerating credit market reforms leads to a large growth acceleration effect for the late reformers, which points to large dynamic welfare gains from deregulation. The latter result suggests that a large-scale credit market re-regulation in the aftermath of the Great Recession is a misguided approach to deal with the consequences of the financial crisis.

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File URL: http://www.cerge-ei.cz/pdf/wp/Wp424.pdf
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Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp424.

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Date of creation: Oct 2010
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Handle: RePEc:cer:papers:wp424
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  1. Richard B. Freeman, 2008. "Labor market institutions around the world," LSE Research Online Documents on Economics 19647, London School of Economics and Political Science, LSE Library.
  2. repec:ner:tilbur:urn:nbn:nl:ui:12-4295080 is not listed on IDEAS
  3. W. Bentley MacLeod & Voraprapa Nakavachara, 2007. "Can Wrongful Discharge Law Enhance Employment?," Economic Journal, Royal Economic Society, vol. 117(521), pages 218-278, 06.
  4. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
  5. Simon Johnson & William Larson & Chris Papageorgiou & Arvind Subramanian, 2009. "Is Newer Better? Penn World Table Revisions and Their Impact on Growth Estimates," NBER Working Papers 15455, National Bureau of Economic Research, Inc.
  6. Estevadeordal, Antoni & Taylor, Alan M., 2008. "Is the Washington Consensus Dead? Growth, Openness, and the Great Liberalization, 1970s-2000s," CEPR Discussion Papers 6942, C.E.P.R. Discussion Papers.
  7. Hausmann, Ricardo & Pritchett, Lant & Rodrik, Dani, 2004. "Growth Accelerations," Working Paper Series rwp04-030, Harvard University, John F. Kennedy School of Government.
  8. Eric Tymoigne, 2009. "Securitization, Deregulation, Economic Stability, and Financial Crisis, Part I--The Evolution of Securitization," Economics Working Paper Archive wp_573_1, Levy Economics Institute.
  9. Clifford Winston, 1998. "U.S. Industry Adjustment to Economic Deregulation," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 89-110, Summer.
  10. Babetskii, Ian & Campos, Nauro F, 2007. "Does Reform Work? An Econometric Examination of the Reform-Growth Puzzle," CEPR Discussion Papers 6215, C.E.P.R. Discussion Papers.
  11. Antonio Estache & L. Wren-Lewis, 2009. "Towards a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont's Lead," ULB Institutional Repository 2013/43903, ULB -- Universite Libre de Bruxelles.
  12. Marco Leonardi & Giovanni Pica, 2010. "Who Pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation," CSEF Working Papers 265, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 13 May 2012.
  13. Geert Bekaert & Campbell R. Harvey & Christian Lundblad, 2001. "Does Financial Liberalization Spur Growth?," NBER Working Papers 8245, National Bureau of Economic Research, Inc.
  14. Takeo Hoshi & Anil Kashyap, 1999. "The Japanese Banking Crisis: Where Did It Come From and How Will It End?," NBER Working Papers 7250, National Bureau of Economic Research, Inc.
  15. Anita Wölfl & Isabelle Wanner & Tomasz Koźluk & Giuseppe Nicoletti, 2009. "Ten Years of Product Market Reform in OECD Countries: Insights from a Revised PMR Indicator," OECD Economics Department Working Papers 695, OECD Publishing.
  16. Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: A Honeymoon Effect?," Carlo Alberto Notebooks 37, Collegio Carlo Alberto.
  17. Juan Botero & Simeon Djankov & Rafael Porta & Florencio C. Lopez-De-Silanes, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, MIT Press, vol. 119(4), pages 1339-1382, November.
  18. Leonardi, Marco & Pica, Giovanni, 2007. "Employment Protection Legislation and Wages," IZA Discussion Papers 2680, Institute for the Study of Labor (IZA).
  19. Dani Rodrik, 2008. "Second-Best Institutions," NBER Working Papers 14050, National Bureau of Economic Research, Inc.
  20. Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
  21. Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2010. "Labor Laws and Innovation," NBER Working Papers 16484, National Bureau of Economic Research, Inc.
  22. Michael Alexeev & Robert Conrad, 2009. "The Natural Resource Curse and Economic Transition," Caepr Working Papers 2009-018, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  23. Zilibotti, Fabrizio & Aghion, Philippe & Acemoglu, Daron, 2006. "Distance to Frontier, Selection, and Economic Growth," Scholarly Articles 4554122, Harvard University Department of Economics.
  24. Charles Calomiris, 2009. "Banking Crises and the Rules of the Game," NBER Working Papers 15403, National Bureau of Economic Research, Inc.
  25. repec:use:tkiwps:0701 is not listed on IDEAS
  26. Beck, T.H.L. & Laeven, L., 2006. "Institution building and growth in transition economies," Other publications TiSEM b872919e-8dac-46d6-9c0a-6, Tilburg University, School of Economics and Management.
  27. Levon Barseghyan, 2008. "Entry costs and cross-country differences in productivity and output," Journal of Economic Growth, Springer, vol. 13(2), pages 145-167, June.
  28. Stiroh, Kevin J & Strahan, Philip E, 2003. " Competitive Dynamics of Deregulation: Evidence from U.S. Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 801-28, October.
  29. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA).
  30. Joshua L. Rosenbloom & William A. Sundstrom, 2009. "Labor-Market Regimes in U.S. Economic History," NBER Working Papers 15055, National Bureau of Economic Research, Inc.
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