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Regulations & Economic Growth

Are government regulatory expansions associated with reduced economic growth?

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Contrary to a New York Times article that claims “there is little historical evidence tying regulation levels to” economic growth, a study published by the Journal of Economic Growth in 2013 found that federal regulatory expansions are associated with “substantial reductions” in economic growth. This finding accords with the fact that productivity is the primary driver of economic growth, and federal regulations spiked and productivity growth crashed during the presidencies of Jimmy Carter (1977-1980) and Barack Obama (2009-2016). Like the vast majority of economic studies, these data only show associations, and association does not prove causation. However, there are numerous mechanisms by which regulations can hamper economic growth, as detailed at the first link below.




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