Federal Regulation and Aggregate Economic Growth

John Dawson and John Seater ()

No 09-02, Working Papers from Department of Economics, Appalachian State University

Abstract: We introduce a new measure of the extent of federal regulation in the U.S. and use it to investigate the relationship between federal regulation and macroeconomic performance. We find that regulation has statistically and economically significant effects on aggregate output and the factors that produce it–total factor productivity (TFP), physical capital, and labor. Regulation has caused substantial reductions in the growth rates of both output and TFP and has had effects on the trends in capital and labor that vary over time in both sign and magnitude. Regulation also affects deviations about the trends in output and its factors of production, and the effects differ across dependent variables. Regulation changes the way output is produced by changing the mix of inputs. Changes in regulation and marginal tax rates offer a straightforward explanation for the productivity slowdown of the 1970s. Key Words: Regulation; macroeconomic performance; economic growth; productivity slowdown

JEL-codes: E20 L50 O40 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-reg
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http://econ.appstate.edu/RePEc/pdf/wp0902.pdf (application/pdf)

Related works:
Journal Article: Federal regulation and aggregate economic growth (2013)
Working Paper: Federal Regulation and Aggregate Economic Growth (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:apl:wpaper:09-02

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