Measuring the Cost of Regulation: A Text-Based Approach

Regulatory Costs and Market Power

“…The second set of papers measures how companies reveal to be affected by regulation. For example, industry level spending on compliance occupations (Simkovic and Zhang (2019)) and frequent usage of keywords such as "regulation" (Calomiris et al (2020), Gong and Yannelis (2018)). These measures lack a ground truth measure to validate with.…”

A Narrative Approach to Creating Instruments with Unstructured and Voluminous Text: An Application to Policy Uncertainty

“…We now want to classify each mention of uncertainty based on its theme. Following Calomiris et al (2020), we use a natural language processing technique called latent Dirichlet allocation (LDA). 12 The LDA algorithm (developed by Blei, Ng, & Jordan, 2003) is based on two ideas.…”

“…To assign a topic to each document/uncertainty mention, we first find the topic for that document/uncertainty mention with the highest probability. However, in line with Calomiris et al (2020), we only allocate a topic to a document/uncertainty mention if the topic with the maximum probability has a probability over 0.5.…”

Watch What They Do, Not What They Say: Estimating Regulatory Costs from Revealed Preferences

“…9 Some researchers have developed indices of regulatory costs based on textual analysis of the regulatory provisions or compliance-related spending (Al-Ubaydli and McLaughlin, 2017;Calomiris, Mamaysky, and Yang, 2020;Simkovic and Zhang, 2020). These indices are helpful for understanding the cross-section variations in regulatory exposure, but they are difficult to be translated into monetary values in a CBA.…”