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

44 Pages Posted: 9 Jun 2017

See all articles by Andrea Bastianin

Andrea Bastianin

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

Paolo Castelnovo

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS)

Massimo Florio

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Date Written: June 8, 2017

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

JEL Classification: B41, C20, C54, D04, L98

Suggested Citation

Bastianin, Andrea and Castelnovo, Paolo and Florio, Massimo, The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues (June 8, 2017). FEEM Working Paper No. 22.2017. Available at SSRN: https://ssrn.com/abstract=2983019 or http://dx.doi.org/10.2139/ssrn.2983019

Andrea Bastianin (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

U6 Building
Viale Piero e Alberto Pirelli, 22
Milano, 20126
Italy

Paolo Castelnovo

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Massimo Florio

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio 7
I-20122 Milano, 20122
Italy
+39 02 50321510 (Phone)
+39 02 50321505 (Fax)

HOME PAGE: http://www.demm.unimi.it/ecm/home

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