In Praise of (Some) Red Tape: A New Approach to Regulation.

• Autores: Gordon Menzies, PETER B. DIXON, MAUREEN T. RIMMER
• Localización: Economic record, ISSN 0013-0249, Vol. 92, Nº. 299, 2016, págs. 631-647
• Idioma: inglés
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• Resumen

  • The costs of removing red tape include a lower chance of detecting recession-generating flaws in the financial system. What we call independent dimensions of regulation ( IDRs) operate more or less independently from other groupings. If an IDR's optimality is unknown, it may be risky to remove. Uncertainty thus implies that (some) red tape - a small amount of overregulation - is justified, in contrast to the Brainard principle that uncertainty dictates less policy activism. The long-run Gross Domestic Product (GDP) benefit of a 1 per cent improvement in financial services productivity is 0.06 per cent in our computable general equilibrium model. These relatively modest gains reinforce our conclusion.