Regulation and the Macroeconomy

36 Pages Posted: 6 Feb 2004

See all articles by John W. Dawson

John W. Dawson

Appalachian State University - Department of Economics

John J. Seater

Economics Dept., Boston College

Date Written: January 2004


We introduce a new measure of the extent of federal regulation, the number of pages in the Code of Federal Regulations, and use it to investigate the relationship between federal regulation and macroeconomic performance in the U.S. We find that regulation has statistically and economically significant effects on aggregate output and the factors that produce it - total factor productivity, physical capital, and labor. In particular, regulation reduces the annual trend rate of growth in output by seven- to nine-tenths of a percentage point, implying a large annual cost (currently $5.4 trillion) in foregone annual output. Regulation also has complicated dynamic effects on all variables. The effects differ across factors of production, implying both dynamic and ultimate effects on resource allocation.

Keywords: Regulation, macroeconomic performance

JEL Classification: L50, O40

Suggested Citation

Dawson, John W. and Seater, John J., Regulation and the Macroeconomy (January 2004). Available at SSRN: or

John W. Dawson

Appalachian State University - Department of Economics ( email )

Boone, NC 28608
United States

John J. Seater (Contact Author)

Economics Dept., Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States