Loayza, Norman V.Oviedo, Ana MariaServén, Luis2012-06-252012-06-252004-09https://hdl.handle.net/10986/8953Regulation 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.en-USCC BY 3.0 IGOADMINISTRATIVE PROCEDURESBANKRUPTCYBANKRUPTCY PROCESSBUSINESS CONDITIONSBUSINESS CYCLESBUSINESS ENVIRONMENTCAPITAL ACCUMULATIONCAPITAL MARKETSCIVIL CONFLICTCONTRACT ENFORCEMENTCORPORATE TAXDEREGULATIONDEVELOPING COUNTRIESECONOMIC ACTIVITYECONOMIC GROWTHECONOMIC IMPACTEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL STUDIESEMPLOYMENTENDOGENEITYENVIRONMENTAL CONSERVATIONENVIRONMENTAL REGULATIONSEXCHANGE RATEEXPERIMENTSFINANCIAL MARKETSFINANCIAL REGULATIONHUMAN CAPITALINCOMEINNOVATIONINSTITUTIONAL DEVELOPMENTINSTITUTIONAL FRAMEWORKINTEREST RATEINVESTMENT CLIMATELABOR FORCELABOR MARKETSLATIN AMERICANLAWSLICENSESMACROECONOMIC PERFORMANCEMACROECONOMIC STABILITYMACROECONOMICSMARKET COMPETITIONMARKET ECONOMIESMARKET FAILURESMULTIPLE REGRESSION ANALYSISNEGATIVE EFFECTSPOLICY MAKERSPOLITICAL ECONOMYPRIVATE INVESTMENTPRODUCERSPRODUCTIVITYPRODUCTIVITY GROWTHPROXYPUBLIC INFRASTRUCTUREPUBLIC SECTORREGULATORY BURDENREGULATORY FRAMEWORKSAFETYSECURITIESSECURITIES MARKETSSOCIAL WELFARESPILLOVERSTAX RATESTAXATIONTAXESTERMS OF TRADETRADETRADE SHOCKSUNEMPLOYMENTWorld Bank10.1596/1813-9450-3469