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The Effect of Regulations in an Endogenous growth model with Research and Development

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  • Vasilev, Aleksandar

Abstract

We utilize a relatively standard endogenous growth model with intermediaries and research and development (R&D). We augment the setup with government regulations to study the effect of regulations on aggregate allocations. The novelty is that we endogeneize the problem of the regulator, so the number of regulations is determined within the model. Next, we solve the model and derive some comparative static results. The qualitative results confirm that more regulation leads to a lower number intermediaries, but each of those is now larger. Investment in physical capital is higher, but that comes at the expense of lower investment in R&D, lower consumption, lower output, and lower welfare. Overall, the intuition that regulation is bad for the economy is confirmed.

Suggested Citation

  • Vasilev, Aleksandar, 2022. "The Effect of Regulations in an Endogenous growth model with Research and Development," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 0(1 (forthc).
    • Handle: RePEc:zbw:espost:251943
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    1. Vasilev, Aleksandar, 2017. "Notes on Exogenous Growth Models," EconStor Research Reports 149875, ZBW - Leibniz Information Centre for Economics.
    2. Stankov, Petar & Vasilev, Aleksandar, 2019. "Business reform outcomes: Why so different?," Journal of Policy Modeling, Elsevier, vol. 41(6), pages 1109-1127.
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      More about this item

      Keywords

      Endogenous growth model; R&D;

      JEL classification:

      • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
      • L5 - Industrial Organization - - Regulation and Industrial Policy

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