Federal Regulation and Aggregate Economic Growth

John Dawson and John Seater ()

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: We introduce a new time series 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. Qualitatively our results agree with those obtained from cross-section and panel measures of regulation using cross-country data, but quantitatively our estimated effects are somewhat smaller than those obtained heretofore.

Keywords: Regulation; macroeconomic performance; economic growth; productivity slowdown (search for similar items in EconPapers)
JEL-codes: E20 L50 O40 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2010-09
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Related works:
Journal Article: Federal regulation and aggregate economic growth (2013)
Working Paper: Federal Regulation and Aggregate Economic Growth (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c015_050

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