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Should Regulation Be Countercyclical?

30 Pages Posted: 10 Nov 2016 Last revised: 20 Nov 2016

Jonathan S. Masur

University of Chicago - Law School

Eric A. Posner

University of Chicago - Law School

Date Written: November 4, 2016

Abstract

Politicians and commentators have from time to time proposed that regulations be suspended or delayed during recessions because of their adverse impact on employment. We evaluate this argument from within a macroeconomic framework. We argue that a case can be made for what we call countercyclical regulation if certain empirical premises are valid; explore the ways in which such regulation might best be designed; and evaluate the legal authority of agencies to issue countercyclical regulations. Because the empirical premises for countercyclical regulation are highly uncertain, it should be adopted on an experimental basis.

Keywords: Macroeconomics, Regulation, Fiscal Policy, Monetary Policy, Automatic Stabilizers, EPA, Environment

Suggested Citation

Masur, Jonathan S. and Posner, Eric A., Should Regulation Be Countercyclical? (November 4, 2016). Yale Journal on Regulation, Forthcoming; University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 782; U of Chicago, Public Law Working Paper No. 599. Available at SSRN: https://ssrn.com/abstract=2866464

Jonathan Masur (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773.702.5188 (Phone)

HOME PAGE: http://www.law.uchicago.edu/faculty/masur/

Eric Posner

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0425 (Phone)
773-702-0730 (Fax)

HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/

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