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The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues

Andrea Bastianin (), Paolo Castelnovo and Massimo Florio ()
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Paolo Castelnovo: University of Milan

No 2017.22, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Some regulatory reforms do not change just a specific signal that can be represented by a quantitative continuous variable, such as a tax rate, a price cap, or an emission threshold. The standard theory of reform in applied welfare economics (going back to contributions by e.g. Ramsey, Samuelson and Guesnerie) asks the question: What is the marginal effect on social welfare of changing a policy signal? However, reforms such as privatization, unbundling or liberalization of network industries are often described by ‘packages’ shifting a policy framework. It is increasingly frequent in the empirical evaluation of such reforms to use categorical variables, often in polytomous form, for instance describing unbundling steps (vertical integration, accounting, functional, legal, ownership separation) on a discrete numerical scale, such as those proposed by the OECD and other international bodies. We review recent econometric literature evaluating regulatory reforms using such variables (40 papers) and we discuss some methodological issues arising in this context.

Keywords: Econometrics; Policy Evaluation; Network Industries; Reforms (search for similar items in EconPapers)
JEL-codes: B41 C20 C54 D04 L98 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-reg
Date: 2017-06
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Working Paper: The empirics of regulatory reforms proxied by categorical variables: recent findings and methodological issues (2017) Downloads
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