How does Public Regulation affect Growth?
Martin Paldam and
Economics Working Papers from Department of Economics and Business Economics, Aarhus University
Public regulations can increase economic growth by correcting market faults and decrease growth by consuming resources and reducing incentives. A simple theoretical framework is developed to represent commonly held views on the relationship between growth an regulation. The relationship is possibly non-linear with some level of regulation being optimal. We estimate the relation by a fixed effect non-linear panel data regression model using a new semi-parametric estimator. The outcome shows that the relationship indeed may be non-linear: High levels of regulation lowers growth, but there is no effect on growth for moderate to low levels of regulation.
Keywords: Fixed effects; growth; semi-parametric regression; panel data; public regulation (search for similar items in EconPapers)
JEL-codes: C14 D7 O4 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2003-14
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