GW Regulatory Studies Center

Welcome to the GW Regulatory Studies Center

The George Washington University Regulatory Studies Center, in the Trachtenberg School of Public Policy and Public Administration, raises awareness of regulations’ effects and improves regulatory policy through research, education, and outreach.

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Latest Upates:

April 25, 2012 - Moving Forward With IRIS Reform Panel Discussion

IRIS Panel

On April 18, 2012, more than 70 participants from government, academia, the private sector, and non-governmental organizations gathered at The George Washington University to hear a panel discussion on “Moving Forward With IRIS Reform: Implementing the National Academies’ Roadmap for Revisions.” A joint effort by the GW Regulatory Studies Center, the GW Center for Risk Science and Public Health and the National Capital Area Chapter of the Society for Risk Analysis, the event featured an expert panel that discussed creative ways to make the EPA’s Integrated Risk Information System (IRIS) more timely and effective.

Please Click Here to read the event summary and to view the panelists' presentations.

Regulatory Policy Commentary:

Regulators' Budget & Jobs: An Update

By Tara Sinclair and Kathryn Vesey*

Recent commentary on our Regulatory Studies Center Working Paper, “Regulation, Jobs, and Economic Growth: An Empirical Analysis” made the valid point that inclusion of a time trend in our estimates would improve the robustness of our model. Thus in this commentary, we update our preferred model to include an exogenous time trend. The impulse response functions after including a time trend in the model are presented in Figure 1 below. [1] As the Phoenix Center for Advanced Legal and Economic Public Policy Studies Policy Perspective No. 12-01, “Regulatory Expenditures, Economic Growth and Jobs: A Reply to Comments,” claimed, this does result in a negative point estimate for the impact of an increase in the Regulators’ Budget on private employment and, for some periods, private GDP. However, based on the traditional two standard deviation confidence intervals we report here, none of the estimates are statistically significantly different from zero. This finding is consistent with the overall conclusions of our Regulatory Policy Commentary and our Working Paper.

We must emphasize that this finding of statistical insignificance does not in any way imply that regulations do not affect the economy. Government regulations have real economic costs, as well as benefits, which affect the decisions and resources of firms and individuals in complex ways. This is why it is so important to quantify, as completely and accurately as possible, the effects of regulations at an individual level to evaluate their economic and distributional impacts. Our analysis only examined average macroeconomic impacts of one proxy for government regulation – the budgets of federal regulatory agencies. In our working paper (p. 10), we offer several possible explanations for why it is so difficult to discern a causal relationship at an aggregate level between macroeconomic performance indicators and this proxy for regulatory activity.

Furthermore, our findings do not “minimize the relevance of” the Regulators’ Budget data. The data provide useful information on regulatory agency spending trends in a number of social and economic areas, lending insight into changing political and social priorities over time. Moreover, in this current fiscal environment, public policymakers may increasingly turn to regulation to achieve social goals that might otherwise be pursued through direct spending programs or tax policy. Tracking Regulators’ Budget data can also help monitor whether this is the case as well.

Finally, regarding the inclusion of the Transportation Security Administration (TSA), the Regulators’ Budget is reported both with and without TSA spending, largely because it is by far the largest driver of regulatory agency spending growth in the last decade and can thus skew the data. The TSA regulates behavior in different ways than other agencies (inspecting passengers before travel), thus we considered both inclusion and exclusion of TSA in our working paper and found no difference in our conclusions at the macro level.

In summary, after adjusting for the exogenous time trend as suggested by the Phoenix Center we do find a negative point estimate for the impact of a shock to the Regulators’ Budget on private employment, but this impact is statistically indistinguishable from zero. This is consistent with our previous commentary, which concludes, “the macroeconomic effect of regulatory agencies’ budgets appears to be undetectable using the data and statistical methods available.”

[1] For a discussion of the model and the estimation of the model and construction of the impulse response functions, see our March 2012 working paper. These figures replace Figure 7 in the working paper by adding an exogenous time trend to the model.

* Tara M. Sinclair, Ph.D., is Associate Professor of Economics and International Affairs at The George Washington University, as well as a Scholar at the GW Regulatory Studies Center. Kathryn Vesey is Research Associate at the GW Regulatory Studies Center, as well as a Master of Public Policy Candidate at The Trachtenberg School of Public Policy and Public Administration.

Upcoming Events

May 17, 2012: Ragnar Lofstedt: Regulatory Lookback: An Independent Review of the EU's Health and Safety Legislation

June 7-8, 2012:
Federal Executive Course: Federal Regulatory Policy, Process, and Analysis

Recent Research

Global Economies, Regulatory Failure, & Loose Money: Lessons for Regulating the Finance Sector from Iceland's Financial Crisis by RSC Research Scholar Andrew Morriss and Birgir T. Petursson

Regulatory Effectiveness in Onshore & Offshore Financial Centers by RSC Research Scholar Andrew Morriss and Clifford Chad Henson

Developing Credibility in Public-Private Partnerships: The Case of Manila Water Supply, by Manish Kumar and RSC Co-director Gerald Brock

Regulation, Jobs, and Economic Growth: An Empirical Analysis, a working paper by Tara M. Sinclair and Kathryn Vesey

Regulatory Subsidies: A Primer, a working paper by Brian F. Mannix

Something in the Water? Testing for Groundwater Quality Information in the Housing Market. By Patrick A. McLaughlin, published in the Journal of Agricultural and Resource Economics.

Administrative Law Review OIRA Anniversary Symposium Issue (Copies available upon request)

How Long Does it Take to Do a Good Regulatory-Impact Analysis?, a working paper by Shapiro Stuart & John Morrall

How Firms Build Trust in Markets with Asymmetric Information, a working paper by Craig J. Richardson, Visiting Scholar

(Mis)Applications of Behavioral Economics to Regulation: The Importance of Public Choice Architure, a working paper by Adam C. Smith, Visiting Scholar

Prospects for Regulatory Reform in 2011, by Susan Dudley, published in the June 2011 issue of Engage. (Also read full working paper.)

“Regulators and Redskins” This new working paper by visitng scholar Patrick A. McLaughlin and co-authors offers an amusing reminder that the human factor can change economic outcomes in all walks of life. It is forthcoming in the journal Public Choice.

Fiscal Stalemate Reflected in Regulators’ Budget: An Analysis of the U.S. Budget for Fiscal Years 2011 and 2012 by Susan Dudley and Melinda Warren, tracks the federals spending and staffing at regulatory agencies from 1960 to 2012.

Alfred Kahn 1917 - 2010, Read Susan Dudley's tribute in Regulation.

Draft report to ACUS on public commenting by Steve Balla is open for comment.

Engaging Stakeholders in Designing Regulation was presented by RSC scholars in Amsterdam.

Recent Commentaries

Final Rule Data Explained

Public-Private Partnerships and Regulation

A Personal Recollection of an Extraordinary Teacher, James Q. Wilson, 1931-2012

Treading the Regulatory Waters: When Misleading Signals Lead to Misallocated Risk

A "Spring Cleaning" of Our Regulatory System

President’s Job Council Recommends Sensible Regulatory Reforms

EPA’s Mercury and Air Toxics Rule Will Not Improve Public Health

The Private Sector Costs of the Regulators' Budget

CPR Report on OIRA's Meetings Ignores Their Context

ACUS Recommends Greater International Regulatory Cooperation

Regulatory Reform Measures Pass the House