The Macroeconomic Effects of Legal-Simplification Programmes
UECE Working Paper No. 12/2012
31 Pages Posted: 16 Jul 2013
Date Written: February 2012
Legal simplification may improve the quality of institutions in industrialised countries that developed over-complex legal systems. In theory, this type of regulatory reform promotes economic efficiency, leading to higher levels of productivity and output. In this paper we use a Panel Factor-Augmented VAR approach to measure the long-run impact of legal-simplification programmes in total factor productivity. We identify shocks using data on regulatory quality and exploring qualitative information publicly available. The estimated long-run impact on total factor productivity of a typical programme is significant and about 0.6 per cent.
Keywords: legal simplification, regulatory reform, FAVAR, productivity
JEL Classification: E02, K10, K20, K40, O43, O47
Suggested Citation: Suggested Citation