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The Macroeconomic Effects of Legal- Simplification Programmes

Author

Listed:
  • Luis Costa
  • Miguel St. Aubyn

Abstract

Legal simplification may improve the quality of institutions in industrialised countries that developed over-complex legal systems. In theory, this type of regulatory reform promotes economic efficiency, leading to higher levels of productivity and output. In this paper we use a Panel Factor-Augmented VAR approach to measure the long-run impact of legal-simplification programmes in total factor productivity. We identify shocks using data on regulatory quality and exploring qualitative information publicly available. The estimated long-run impact on total factor productivity of a typical programme is significant and about 0.6 per cent.

Suggested Citation

  • Luis Costa & Miguel St. Aubyn, 2012. "The Macroeconomic Effects of Legal- Simplification Programmes," Working Papers Department of Economics 2012/12, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp122012
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    File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp122012.pdf
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    References listed on IDEAS

    as
    1. Christina D. Romer & David H. Romer, 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," NBER Chapters,in: NBER Macroeconomics Annual 1989, Volume 4, pages 121-184 National Bureau of Economic Research, Inc.
    2. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, March.
    3. Bertrand Crettez & Bruno Deffains & Régis Deloche, 2009. "On the optimal complexity of law and legal rules harmonization," European Journal of Law and Economics, Springer, vol. 27(2), pages 129-142, April.
    4. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    5. Tue Gørgens & Martin Paldam & Allan H. Würtz, 2005. "Growth, Income and Regulation: a Non-Linear Approach," CAM Working Papers 2005-12, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
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    More about this item

    Keywords

    Legal simplification; Regulatory reform; FAVAR; Productivity JEL Classification: E02; K10; K20; K40; O43; O47;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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