The Impact of Regulatory Growth on Operating Costs
26 Pages Posted: 22 Sep 2020
Date Written: August 2020
Abstract
We investigate the effect of recent regulatory growth on operating costs per unit of output across a variety of US industries. Using an Augmented Mean Group estimator approach, we find that regulations in the current year and four to five years prior have statistically significant upward effects on operating costs per unit of output. This suggests that the most pronounced effects of regulations occur when a regulation is passed and when compliance dates arrive. Our results imply that the average level of annual regulatory growth (3.55 percent) increases operating costs per unit of output by 3.3 percentage points per year relative to a baseline of no regulatory growth.
Keywords: regulation, regulatory accumulation, operating costs, augmented mean group estimator
JEL Classification: C23, D24, L51
Suggested Citation: Suggested Citation