FEEM working papers "Note di lavoro" series
2017 .022

The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues


Authors: Andrea Bastianin, Paolo Castelnovo, Massimo Florio
Series: Economic Theory
Editor: Carlo Carraro
Keywords: Econometrics, Policy Evaluation, Network Industries, Reforms
JEL n.: B41, C20, C54, D04, L98

Abstract

Some regulatory reforms do not change just a specific signal that can be represented by a quantitative continuous variable, such as a tax rate, a price cap, or an emission threshold. The standard theory of reform in applied welfare economics (going back to contributions by e.g. Ramsey, Samuelson and Guesnerie) asks the question: What is the marginal effect on social welfare of changing a policy signal? However, reforms such as privatization, unbundling or liberalization of network industries are often described by ‘packages’ shifting a policy framework. It is increasingly frequent in the empirical evaluation of such reforms to use categorical variables, often in polytomous form, for instance describing unbundling steps (vertical integration, accounting, functional, legal, ownership separation) on a discrete numerical scale, such as those proposed by the OECD and other international bodies. We review recent econometric literature evaluating regulatory reforms using such variables (40 papers) and we discuss some methodological issues arising in this context.

***

Suggested citation:  Bastianin, A., P. Castelnovo, M. Florio, (2017), 'The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues', Nota di Lavoro 22.2017, Milan, Italy: Fondazione Eni Enrico Mattei
 

Download file
Download PDF file

FEEM Update

Subscribe to stay connected.

Your personal data will be processed by Fondazione Eni Enrico Mattei. – data Controller – with the aim of emailing the FEEM newsletter. The use of Your email address is necessary for the implementation of the newsletter service. You are invited to read the Privacy Policy in order to obtain additional information about the protection of Your rights.

This Website uses technical cookies and cookie analytics, as well as “third party” profiling cookies.
If you close this banner or you decide to continue navigating on this Website, you express consent to the use of cookies. If you need additional information or you wish to express selective choices on the use of cookies, please refer to the   Cookie PolicyI agree