More Laws, More Growth? Evidence from U.S. States

Elliott Ash, Massimo Morelli and Matia Vannoni

No 22178, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: This paper analyzes the conditions under which more legislation contributes to economic growth. In the context of U.S. states, we apply natural language processing tools to measure legislative flows for the years 1965-2012. We implement a novel shift-share design for text data, where the instrument for legislation is leave-one-out legal-topic flows interacted with pre-treatment legal-topic shares. We find that at the margin, higher legislative output causes more economic growth. Guided by a simple model of reform decision-making under uncertainty, we find that the effect is driven by contingent clauses, that the effect is concave in the preexisting stock of legislation, and that the effect size is increasing with economic policy uncertainty.

Keywords: Legislative production; growth; regulatory complexity; economic uncertainty (search for similar items in EconPapers)
Pages: 102
Date: 2022
New Economics Papers: this item is included in nep-gro, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: More Laws, More Growth? Evidence from U.S. States (2022)
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