Department of Economics Seminar Series

“Is Regulatory Rulemaking State-Contingent? An Empirical Analysis” Abstract: A fundamental question in macroeconomics is how monetary and fiscal policy should be designed to respond to economic fluctuations. Recently, however, an interest has also emerged in whether and how other types of policies – such as environmental regulations -should be made contingent on economic conditions. This literature has often disagreed about the extent to which state-contingent regulations are realistically possible. Taking a positive approach, this paper thus asks: To which extent is regulatory rulemaking already state-contingent? The core analysis takes advantage of a unique feature of the U.S. aviation safety system to overcome the usual identification problem of counterfactual regulatory burdens. The main [preliminary] result is that I .find evidence of state-contingent rulemaking on the extensive margin: A one-standard deviation increase in the air transport industry growth rate (+8%) increases the odds that the Federal Aviation Administration (FAA) imp lements a new air safety recommendation issued the following year by a factor of around 1.2, and is estimated to increase the aggregate share of safety recommendations implemented by 2-3 percentage points. In addition, I study suggestive evidence from other areas of regulation and .find patterns tentatively consistent with state-contingent regulatory behavior. For example, proposed regulations appear significantly more likely to be subject to additional government scrutiny during economic downturns. Free and open to the public. More info: http://econ.ucalgary.ca/seminarseries/winter2014

Location:

SS 423

Speaker:

Lint Barrage, University of Maryland

More information at http://www.ucalgary.ca/events/calendar/department-economics-seminar-series