Regulations and productivity: long run effects and non linear influences

This study estimates the impact of product market regulations on Total Factor Productivity (TFP) and distinguishes between its short run and long run effects. It also explores whether regulatory changes exert a nonlinear influence on TFP growth. The obtained empirical evidence reveals that in the long run lower regulations exert a significantly positive effect on TFP of OECD countries. Short run effects of regulation are not always statistically significant. The influence of regulatory changes is higher in countries with high levels of regulation. Also, the damaging effects of regulation are more intense in countries with low technology gaps. These results hold across a wide array of econometric specifications and variables that measure regulation and TFP