(Kellogg School of Management)

In a blog post on the Treasury Department’s Webdsite Monday morning, Eberly atttempts to debunk what she describes as “two commonly repeated misconceptions...that uncertainty created by proposed regulations is holding back business investment and hiring and that the overall burden of existing regulations is so high that firms have reduced their hiring.” She continues:

If regulatory uncertainty was a major impediment to hiring right now, we would expect to see indications of this in one or more of the following: business profits; trends in the workforce, capacity utilization, and business investment; differences between industries undergoing significant regulatory changes and those that are not; differences between the United States and other countries that are not undergoing the same changes; or surveys of business owners and economists. As discussed in a detailed review of the evidence below, none of these data support the claim that regulatory uncertainty is holding back hiring.

So what does Eberly believe is responsible instead for our economic troubles? She doesn’t fully make the case in this post but suggests throughout that it’s weak demand, citing recent surveys of small business owners and economists that “a lack of demand, not government policy, was the main impediment” to growth. As to the government’s role in pumping up such demand, she doesn’t yet say. But it will be worth keeping track of her remarks in the days ahead, particularly as Senate Democrats push for to pass the infrastructure investment part of Obama’s jobs bill. In the meantime, I’ll be taking a closer look at her academic work and how it could influence the policy decisions coming out of the White House and Treasury.