The cumulative cost of regulations

Coffey, Bentley; McLaughlin, Patrick A.; Peretto, Pietro F.

doi:10.1016/j.red.2020.03.004

Cited by 36 publications

(21 citation statements)

References 20 publications

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“…In academic research, theoretical models that incorporate the effects of regulation on innovation or productivity are also limited. Coffey et al (2020) presents one way of considering the impact of regulatory constraints on productivity in an endogenous growth model. In their model, firm i in industry j produces goods with the following technology:…”

Section: Economic Effects Of Regulationmentioning

confidence: 99%

“…is the total factor productivity, Z ij is the labor-enhancing knowledge specific to the firm, ζ j is the elasticity of the firm's output to knowledge, L Y ij is the labor employed in producing Y ij , φ j is a fixed labor cost, and R j is regulatory constraints (Coffey et al, 2020). The firm accumulates knowledge according to:…”

Section: Economic Effects Of Regulationmentioning

confidence: 99%

“…Therefore, our study also connects to the literature studying the aggregate economic effects of regulation. As detailed in the next section, this literature has mostly focused on the volume or restriction of regulation (Coffey et al, 2020;Dawson and Seater, 2013), so our study presents a new direction of considering the economic impact of regulation.…”

Section: Introductionmentioning

confidence: 99%

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Sentiment and uncertainty about regulation

Sinclair

Xie

2021

SSRN Journal

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Regulatory policy can create economic and social benefits, but poorly designed or excessive regulation may generate substantial adverse effects on the economy. In this paper, we present measures of sentiment and uncertainty about regulation in the U.S. over time and examine their relationships with macroeconomic performance. We construct the measures using lexicon-based sentiment analysis of an original news corpus, which covers 493,418 news articles related to regulation from seven leading U.S. newspapers. As a result, we build monthly indexes of sentiment and uncertainty about regulation and categorical indexes for 14 regulatory policy areas from January 1985 to August 2020. Impulse response functions indicate that a negative shock to sentiment about regulation is associated with large, persistent drops in future output and employment, while increased regulatory uncertainty overall reduces output and employment temporarily. These results suggest that sentiment about regulation plays a more important economic role than uncertainty about regulation. Furthermore, economic outcomes are particularly sensitive to sentiment around transportation regulation and to uncertainty around labor regulation.

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Section: Economic Effects Of Regulationmentioning

confidence: 99%

Section: Economic Effects Of Regulationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Sentiment and uncertainty about regulation

Sinclair

Xie

2021

SSRN Journal

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“…Nonetheless, whether economically or socially desirable, all regulations come at a ‘cost’ of preventing activity that would be otherwise permitted. Those costs include imposing a burden on firm performance (OECD, 2010), deterrence of innovation through preventing experimentation (Thierer, 2014), facilitating rent‐seeking behaviour (Stigler, 1971; Tullock, 1967), and distorting the allocation of resources with consequences for productivity and economic growth (Coffey, McLaughlin, & Peretto, 2020; Hsieh & Klenow, 2009).…”

Section: Deregulating the Regulatory Statementioning

confidence: 99%

“…A more comprehensive assessment of the total regulatory burden would also consider dynamic costs, such as the degree to which distortions in inputs and production optimisation diminish innovation and economic growth. A recent study estimated that the effect of such regulatory distortions within the United States slowed annual economic growth by nearly one percentage point (Coffey et al., 2020). The relationship between innovation and regulatory structures, however, is complex.…”

Section: Deregulating the Regulatory Statementioning

confidence: 99%

The political economy of Australian regulatory reform

et al. 2020

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The problem of regulatory accumulation has increasingly been recognised as a policy problem in its own right. Governments have then devised and implemented regulatory reform policies that directly seek to ameliorate the burdens of regulatory accumulation (e.g. red tape reduction targets). In this paper we examine regulatory reform approaches in Australia through the lens of policy innovation. Our contributions are twofold. We first examine the evolutionary discovery process of regulatory reform policies in Australia (at the federal, intergovernmental, and state levels). This demonstrates a process of policy innovation in regulatory mechanisms and measurements. We then analyse a new measurement of regulatory burden based on text analytics, RegData: Australia. RegData: Australia uses textual analysis to count ‘restrictiveness clauses' in regulation – such as ‘must’, ‘cannot’ and ‘shall’ – thereby developing a new database (RDAU1.0). We place this ‘restrictiveness clauses’ measurement within the context of regulatory policy innovation, and examine the potential for further innovation in regulatory reform mechanisms.

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