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Deregulation, economic growth and growth acceleration

  • Stankov, Petar

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: https://mpra.ub.uni-muenchen.de/26485/1/MPRA_paper_26485.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26485.

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Date of creation: Oct 2010
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Handle: RePEc:pra:mprapa:26485
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  4. Leonardi, Marco & Pica, Giovanni, 2007. "Employment protection legislation and wages," Working Paper Series 0778, European Central Bank.
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  6. 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.
  7. Ross Levine, 2004. "Finance and Growth: Theory and Evidence," NBER Working Papers 10766, National Bureau of Economic Research, Inc.
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  9. Richard Freeman, 2008. "Labor Market Institutions Around the World," CEP Discussion Papers dp0844, Centre for Economic Performance, LSE.
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  12. Beck, Thorsten & Laeven, Luc, 2005. "Institution building and growth in transition economies," Policy Research Working Paper Series 3657, The World Bank.
  13. Alexeev, Michael & Conrad, Robert, 2011. "The natural resource curse and economic transition," Economic Systems, Elsevier, vol. 35(4), pages 445-461.
  14. Acemoglu, Daron & Aghion, Philippe & Zilibotti, Fabrizio, 2002. "Distance to Frontier, Selection, and Economic Growth," CEPR Discussion Papers 3467, C.E.P.R. Discussion Papers.
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  16. Charles Calomiris, 2009. "Banking Crises and the Rules of the Game," NBER Working Papers 15403, National Bureau of Economic Research, Inc.
  17. Dani Rodrik, 2008. "Second-Best Institutions," American Economic Review, American Economic Association, vol. 98(2), pages 100-104, May.
  18. 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.
  19. Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: a Honeymoon Effect?," Economic Journal, Royal Economic Society, vol. 117(521), pages 357-385, 06.
  20. 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.
  21. Hausmann, Ricardo & Pritchett, Lant & Rodrik, Dani, 2004. "Growth Accelerations," Working Paper Series rwp04-030, Harvard University, John F. Kennedy School of Government.
  22. 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.
  23. Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2010. "Labor Laws and Innovation," NBER Working Papers 16484, National Bureau of Economic Research, Inc.
  24. 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).
  25. Clifford Winston, 1998. "U.S. Industry Adjustment to Economic Deregulation," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 89-110, Summer.
  26. 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.
  27. 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.
  28. 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.
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