Does Dodd Frank Act Affect Macroeconomic Variables?

  • Nahid Kalbasi Anaraki Northcentral University
Keywords: Financial regulations, macroeconomic outcomes, GDP growth, private investment, unemployment rate

Abstract

The introduction of Dodd Frank Act has induced lots of controversy among economists on its macroeconomic outcomes; though some see it is a necessary piece of legislation, which can avoid future financial crisis, many think it is detrimental to private investment and employment. To see how the Act affect real macroeconomic variables such as GDP growth, investment, and unemployment rate, this study implements econometric models with time series data over the period of 1990-2015 to estimate how financial regulations in general and Dodd Frank Act in particular affects the above-mentioned variables. The results of this study suggest that the Act has a negative significant impact on GDP growth, private investment, and unemployment rate.    

Author Biography

Nahid Kalbasi Anaraki, Northcentral University
PhD in Economics and Adjunct professor at Northcentral University

References

Aghion, P. & E. Kharoubbi (2013). Cyclical macroeconomic policy, financial regulation and economic growth, BIS Working Paper No. 434. Retrieved from:
http://www.bis.org/events/conf130620/aghionkharroubi.pdf

Covas, F. & J. Driscoll. (2014) Bank liquidity and capital regulation in general equilibrium, Finance and Economics Discussion Series, Division of Research and Statistics and Monetary Affairs, Federal Reserve Board, Washington D.C. Retrieved from:
https://www.federalreserve.gov/econresdata/feds/2014/files/201485pap.pdf

Cetorelli, N. and P. Strahan (2006). Finance as a barrier to entry: Bank competition and industry structure in local U.S. markets, The Journal of Finance, Vol LXI, No.1. Retrieved from:
http://www1.worldbank.org/finance/assets/images/cetorelli_strahan_1104.pdf

De Serre A., S. Kobayakawa S., T. Slok, & L. Vartia. (2006). Regulations of financial system and economic growth in OECD Countries: An Empirical Analysis, OECD Economic Studies No. 43. Retrieved from:
https://www.oecd.org/eco/growth/40505986.pdf

GAO. (2013). Financial regulatory reform: Financial crisis losses and potential impacts of the Dodd Frank Act, GAO 13-180. Retrieved from:
http://www.gao.gov/assets/660/651322.pdf

Gatti, D. & A. Vaubourg (2009). Unemployment and finance: How do financial and labor market factors interact, IZA, Discussion Paper 4075. Retrieved from:
http://ftp.iza.org/dp4075.pdf

Guiso L., T. Japelli, M. Padula, & M. Pagano (2004). EU finance and growth, Economic Policy, October 2004.

Hagedorn M., F. Karahan, I. Manovskii, & K. Mittman (2015). Unemployment benefits and unemployment in the Great Recession: The role of macro effects, Federal Reserve Bank of New York. Retrieved from:
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr646.pdf

Haidar, J. I. (2012). The impact of business regulatory reforms on economic growth, Journal of Japanese and International Economies, Vol 26, PP 285-307. Retrieved from:
http://www.parisschoolofeconomics.eu/docs/haidar-jamal-ibrahim/jjie.pdf

Jomini P. (2011). Effects of inappropriate financial regulation, Science Po, Groupe d’ Economie Mondiale, Policy Brief March 2011. Retrieved from:
http://gem.sciences-po.fr/content/publications/pdf/Jomini_FinancialRegulation032011.pdf

La Porta R., F. De Silanes & A. Shleifer (2002). Government ownership of banks, The Journal of Finance, Vol 57, No.1. Retrieved from:
http://onlinelibrary.wiley.com/doi/10.1111/1540-6261.00422/abstract

Lorenzo E., B. Verdugo, D. Frueceri, & D. Guillaume (2012). Crises, labor market policy and unemployment, IMF, WP 12/65. Retrieved from:
https://www.imf.org/external/pubs/ft/wp/2012/wp1265.pdf

Masur J.S., & E. A. Posner (2011). Regulations, unemployment, and cost benefit analysis, University of Chicago, John M. Olin Law & Economics, Working Paper No.571. Retrieved from:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1920441

Nanto D. (2009). The global financial crisis: Analysis and policy implications, Congressional Research Service, RL34742. Retrieved from:
https://www.fas.org/sgp/crs/misc/RL34742.pdf

White, L. (2011) Preventing bubbles: What role for financial regulations? Cato Journal, Vol. 31, No.3. Retrieved from:
http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2011/9/cj31n3-12.pdf
Published
25-06-2016
How to Cite
Kalbasi Anaraki, N. (2016). Does Dodd Frank Act Affect Macroeconomic Variables?. Journal of Global Economy, 12(2), 93-100. Retrieved from http://www.rcssindia.org/jge/index.php/jge/article/view/434
Section
Articles