Regulation and Macroeconomic Performance

Regulation is purportedly enacted to serve specific social purposes. In reality, however, it follows a more complex political economy process, where legitimate social goals are mixed with the objectives of particular interest groups. Whatever its justification and objectives, regulation can have pot...

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Main Authors:	Loayza, Norman V., Oviedo, Ana Maria, Servén, Luis
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ADMINISTRATIVE PROCEDURES BANKRUPTCY BANKRUPTCY PROCESS BUSINESS CONDITIONS BUSINESS CYCLES BUSINESS ENVIRONMENT CAPITAL ACCUMULATION CAPITAL MARKETS CIVIL CONFLICT CONTRACT ENFORCEMENT CORPORATE TAX DEREGULATION DEVELOPING COUNTRIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC IMPACT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENDOGENEITY ENVIRONMENTAL CONSERVATION ENVIRONMENTAL REGULATIONS EXCHANGE RATE EXPERIMENTS FINANCIAL MARKETS FINANCIAL REGULATION HUMAN CAPITAL INCOME INNOVATION INSTITUTIONAL DEVELOPMENT INSTITUTIONAL FRAMEWORK INTEREST RATE INVESTMENT CLIMATE LABOR FORCE LABOR MARKETS LATIN AMERICAN LAWS LICENSES MACROECONOMIC PERFORMANCE MACROECONOMIC STABILITY MACROECONOMICS MARKET COMPETITION MARKET ECONOMIES MARKET FAILURES MULTIPLE REGRESSION ANALYSIS NEGATIVE EFFECTS POLICY MAKERS POLITICAL ECONOMY PRIVATE INVESTMENT PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROXY PUBLIC INFRASTRUCTURE PUBLIC SECTOR REGULATORY BURDEN REGULATORY FRAMEWORK SAFETY SECURITIES SECURITIES MARKETS SOCIAL WELFARE SPILLOVERS TAX RATES TAXATION TAXES TERMS OF TRADE TRADE TRADE SHOCKS UNEMPLOYMENT
Online Access:	http://documents.worldbank.org/curated/en/2005/01/5585965/regulation-macroeconomic-performance http://hdl.handle.net/10986/8953

id	okr-10986-8953
recordtype	oai_dc
spelling	okr-10986-89532021-04-23T14:02:42Z Regulation and Macroeconomic Performance Loayza, Norman V. Oviedo, Ana Maria Servén, Luis ADMINISTRATIVE PROCEDURES BANKRUPTCY BANKRUPTCY PROCESS BUSINESS CONDITIONS BUSINESS CYCLES BUSINESS ENVIRONMENT CAPITAL ACCUMULATION CAPITAL MARKETS CIVIL CONFLICT CONTRACT ENFORCEMENT CORPORATE TAX DEREGULATION DEVELOPING COUNTRIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC IMPACT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENDOGENEITY ENVIRONMENTAL CONSERVATION ENVIRONMENTAL REGULATIONS EXCHANGE RATE EXPERIMENTS FINANCIAL MARKETS FINANCIAL REGULATION HUMAN CAPITAL INCOME INNOVATION INSTITUTIONAL DEVELOPMENT INSTITUTIONAL FRAMEWORK INTEREST RATE INVESTMENT CLIMATE LABOR FORCE LABOR MARKETS LATIN AMERICAN LAWS LICENSES MACROECONOMIC PERFORMANCE MACROECONOMIC STABILITY MACROECONOMICS MARKET COMPETITION MARKET ECONOMIES MARKET FAILURES MULTIPLE REGRESSION ANALYSIS NEGATIVE EFFECTS POLICY MAKERS POLITICAL ECONOMY PRIVATE INVESTMENT PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROXY PUBLIC INFRASTRUCTURE PUBLIC SECTOR REGULATORY BURDEN REGULATORY FRAMEWORK SAFETY SECURITIES SECURITIES MARKETS SOCIAL WELFARE SPILLOVERS TAX RATES TAXATION TAXES TERMS OF TRADE TRADE TRADE SHOCKS UNEMPLOYMENT Regulation is purportedly enacted to serve specific social purposes. In reality, however, it follows a more complex political economy process, where legitimate social goals are mixed with the objectives of particular interest groups. Whatever its justification and objectives, regulation can have potentially significant macroeconomic consequences, by helping or hampering the dynamics of economic restructuring and resource reallocation that underlie the growth process. This paper provides an empirical analysis of the macroeconomic impact of regulation. It first characterizes the stylized facts on regulation across the world, using a set of newly constructed, comprehensive indicators of regulation in a large number of countries in the 1990s. Using these indicators, the paper studies the effects of regulation on economic growth and macroeconomic volatility employing cross-country regression analysis. In particular, the paper considers whether the effects of regulation are affected by the country's level of institutional development. Finally, the analysis controls for the likely endogeneity of regulation with respect to macroeconomic performance. The paper concludes that a heavier regulatory burden reduces growth and increases volatility, although these effects are smaller the higher the quality of the overall institutional framework. 2012-06-25T17:41:20Z 2012-06-25T17:41:20Z 2004-09 http://documents.worldbank.org/curated/en/2005/01/5585965/regulation-macroeconomic-performance http://hdl.handle.net/10986/8953 English en_US Policy Research Working Paper; No. 3469 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADMINISTRATIVE PROCEDURES BANKRUPTCY BANKRUPTCY PROCESS BUSINESS CONDITIONS BUSINESS CYCLES BUSINESS ENVIRONMENT CAPITAL ACCUMULATION CAPITAL MARKETS CIVIL CONFLICT CONTRACT ENFORCEMENT CORPORATE TAX DEREGULATION DEVELOPING COUNTRIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC IMPACT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENDOGENEITY ENVIRONMENTAL CONSERVATION ENVIRONMENTAL REGULATIONS EXCHANGE RATE EXPERIMENTS FINANCIAL MARKETS FINANCIAL REGULATION HUMAN CAPITAL INCOME INNOVATION INSTITUTIONAL DEVELOPMENT INSTITUTIONAL FRAMEWORK INTEREST RATE INVESTMENT CLIMATE LABOR FORCE LABOR MARKETS LATIN AMERICAN LAWS LICENSES MACROECONOMIC PERFORMANCE MACROECONOMIC STABILITY MACROECONOMICS MARKET COMPETITION MARKET ECONOMIES MARKET FAILURES MULTIPLE REGRESSION ANALYSIS NEGATIVE EFFECTS POLICY MAKERS POLITICAL ECONOMY PRIVATE INVESTMENT PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROXY PUBLIC INFRASTRUCTURE PUBLIC SECTOR REGULATORY BURDEN REGULATORY FRAMEWORK SAFETY SECURITIES SECURITIES MARKETS SOCIAL WELFARE SPILLOVERS TAX RATES TAXATION TAXES TERMS OF TRADE TRADE TRADE SHOCKS UNEMPLOYMENT
spellingShingle	ADMINISTRATIVE PROCEDURES BANKRUPTCY BANKRUPTCY PROCESS BUSINESS CONDITIONS BUSINESS CYCLES BUSINESS ENVIRONMENT CAPITAL ACCUMULATION CAPITAL MARKETS CIVIL CONFLICT CONTRACT ENFORCEMENT CORPORATE TAX DEREGULATION DEVELOPING COUNTRIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC IMPACT EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EMPLOYMENT ENDOGENEITY ENVIRONMENTAL CONSERVATION ENVIRONMENTAL REGULATIONS EXCHANGE RATE EXPERIMENTS FINANCIAL MARKETS FINANCIAL REGULATION HUMAN CAPITAL INCOME INNOVATION INSTITUTIONAL DEVELOPMENT INSTITUTIONAL FRAMEWORK INTEREST RATE INVESTMENT CLIMATE LABOR FORCE LABOR MARKETS LATIN AMERICAN LAWS LICENSES MACROECONOMIC PERFORMANCE MACROECONOMIC STABILITY MACROECONOMICS MARKET COMPETITION MARKET ECONOMIES MARKET FAILURES MULTIPLE REGRESSION ANALYSIS NEGATIVE EFFECTS POLICY MAKERS POLITICAL ECONOMY PRIVATE INVESTMENT PRODUCERS PRODUCTIVITY PRODUCTIVITY GROWTH PROXY PUBLIC INFRASTRUCTURE PUBLIC SECTOR REGULATORY BURDEN REGULATORY FRAMEWORK SAFETY SECURITIES SECURITIES MARKETS SOCIAL WELFARE SPILLOVERS TAX RATES TAXATION TAXES TERMS OF TRADE TRADE TRADE SHOCKS UNEMPLOYMENT Loayza, Norman V. Oviedo, Ana Maria Servén, Luis Regulation and Macroeconomic Performance
relation	Policy Research Working Paper; No. 3469
description	Regulation is purportedly enacted to serve specific social purposes. In reality, however, it follows a more complex political economy process, where legitimate social goals are mixed with the objectives of particular interest groups. Whatever its justification and objectives, regulation can have potentially significant macroeconomic consequences, by helping or hampering the dynamics of economic restructuring and resource reallocation that underlie the growth process. This paper provides an empirical analysis of the macroeconomic impact of regulation. It first characterizes the stylized facts on regulation across the world, using a set of newly constructed, comprehensive indicators of regulation in a large number of countries in the 1990s. Using these indicators, the paper studies the effects of regulation on economic growth and macroeconomic volatility employing cross-country regression analysis. In particular, the paper considers whether the effects of regulation are affected by the country's level of institutional development. Finally, the analysis controls for the likely endogeneity of regulation with respect to macroeconomic performance. The paper concludes that a heavier regulatory burden reduces growth and increases volatility, although these effects are smaller the higher the quality of the overall institutional framework.
format	Publications & Research :: Policy Research Working Paper
author	Loayza, Norman V. Oviedo, Ana Maria Servén, Luis
author_facet	Loayza, Norman V. Oviedo, Ana Maria Servén, Luis
author_sort	Loayza, Norman V.
title	Regulation and Macroeconomic Performance
title_short	Regulation and Macroeconomic Performance
title_full	Regulation and Macroeconomic Performance
title_fullStr	Regulation and Macroeconomic Performance
title_full_unstemmed	Regulation and Macroeconomic Performance
title_sort	regulation and macroeconomic performance
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/01/5585965/regulation-macroeconomic-performance http://hdl.handle.net/10986/8953
_version_	1764406860185600000

Regulation and Macroeconomic Performance

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