IESET.
Hypotheses·regulatory·hayek_regulatory_uncertainty_investment_chilling

In an OECD panel 2000-2023, increases in OECD Product Market Regulation (PMR) stringency and increases in regulatory uncertainty (proxied by year-to-year changes in the OECD PMR sub-indices) are negatively associated with private non-residential investment as a share of GDP, with effects concentrated in capital-intensive long-duration sectors.

The Hayekian prediction is that regulatory unpredictability — not just regulatory level — chills investment by raising the option value of waiting and degrading the relative- price information firms use to allocate capital. Pre-registered claim is that the post-2008 regulatory acceleration (post-GFC financial regulation, post-2012 environmental tightening, GDPR-era data regulation) coincides with a structurally lower investment share than the 2000-2007 baseline, controlling for output-gap and cost-of-capital channels.

REFUTEDengine/runs/hayek_regulatory_uncertainty_investment_chilling

REFUTED — coef=-3.98 (sign opposite claim +), p=0

confidence cueThis test cuts against the claim as written or misses its pre-declared threshold.

policy briefNeeds review

In ordinary language

In plain terms, this asks whether rich-country pmr overall score is actually linked to better or worse nonresidential private investment share income from 2000 to 2023.

plain answer

The data did not support the prediction. coef=-3.98 (sign opposite claim +), p=0

why it matters

This matters because regulatory claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 22 country or place units from 2000 to 2023, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Rich-country pmr overall score
  • Rich-country pmr yoy change
What we checked
  • Nonresidential private investment share income
  • Investment share income 5y change
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/hayek_regulatory_uncertainty_investment_chilling
1007550250200020122023USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show nonresidential_private_investment_share_gdp across 22 sampled countries over 2000–2023.
The shapes above are stylised — none of the lines are real data.
Placeholder for hayek_regulatory_uncertainty_investment_chilling. Published chart will be generated from engine/runs/hayek_regulatory_uncertainty_investment_chilling/chart_data.json.

Who has skin in the game — schools predicting on this

3 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Austrian Business Cycle Theory (ABCT)wins if SUPPORTEDschool refutedClassical Liberalwins if SUPPORTEDschool refutedOrdoliberalism (Freiburg School)wins if SUPPORTEDschool refuted

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:54:29Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

In an OECD panel 2000-2023, increases in OECD Product Market Regulation (PMR) stringency and increases in regulatory uncertainty (proxied by year-to-year changes in the OECD PMR sub-indices) are negatively associated with private non-residential investment as a share of GDP, with effects concentrated in capital-intensive long-duration sectors. The Hayekian prediction is that regulatory unpredictability — not just regulatory level — chills investment by raising the option value of waiting and degrading the relative- price information firms use to allocate capital. Pre-registered claim is that the post-2008 regulatory acceleration (post-GFC financial regulation, post-2012 environmental tightening, GDPR-era data regulation) coincides with a structurally lower investment share than the 2000-2007 baseline, controlling for output-gap and cost-of-capital channels.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if the panel-FE coefficient on PMR yoy change is not significantly negative for investment share (p<0.05), OR if the coefficient on PMR level is positive (which would suggest more-regulated economies invest more, the opposite Hayekian prediction).

formal test & threshold
test:      panel_fe_pmr_change_to_investment_share
threshold: coefficient(pmr_yoy_change → investment_share, country-year FE) < 0 at p<0.05 AND coefficient(pmr_level → investment_share) <= 0 AND magnitude >= 0.10 SD per 1-SD shift in PMR change

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
22 countries · 2000 – 2023
Evidence type
associational

Two-way panel FE on OECD private non-residential investment share. Two treatment variables (level and yoy change in PMR) tested separately and jointly. Robustness: use Baker-Bloom-Davis economic- policy uncertainty (EPU) where available as alternative measure of regulatory uncertainty. Heterodox / progressive null is that regulation is endogenous to investment booms (busy regulators = busy economy) so the negative association is reverse-causality.

Data

VariableSourceTransform
nonresidential_private_investment_share_gdp
outcome
world_bank_wdi:NE.GDI.FPRV.ZStier 2
level
investment_share_gdp_5y_change
outcome
world_bank_wdi:NE.GDI.FPRV.ZStier 2
diff_5y
oecd_pmr_overall_score
treatment
oecd_pmr:overall_scoretier 4
level
oecd_pmr_yoy_change
treatment
oecd_pmr:overall_scoretier 4
yoy
regulatory_quality_wgi
treatment
wgi:RQ.ESTtier 4
level
real_long_term_yield
control
bis:WS_LTRTtier 2
level
output_gap
control
oecd:output_gap_eotier 2
level
log_gdp_pc_ppp
control
world_bank_wdi:NY.GDP.PCAP.PP.KDtier 2
log
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — hayek_regulatory_uncertainty_investment_chilling

Verdict: REFUTED — coef=-3.98 (sign opposite claim +), p=0

Pre-registration

  • Claim: In an OECD panel 2000-2023, increases in OECD Product Market Regulation (PMR) stringency and increases in regulatory uncertainty (proxied by year-to-year changes in the OECD PMR sub-indices) are negatively associated with private non-residential investment as a share of GDP, with effects concentrated in capital-intensive long-duration sectors. The Hayekian prediction is that regulatory unpredictability — not just regulatory level — chills investment by raising the option value of waiting and degrading the relative- price information firms use to allocate capital. Pre-registered claim is that the post-2008 regulatory acceleration (post-GFC financial regulation, post-2012 environmental tightening, GDPR-era data regulation) coincides with a structurally lower investment share than the 2000-2007 baseline, controlling for output-gap and cost-of-capital channels.
  • Falsification rule: The hypothesis is falsified if the panel-FE coefficient on PMR yoy change is not significantly negative for investment share (p<0.05), OR if the coefficient on PMR level is positive (which would suggest more-regulated economies invest more, the opposite Hayekian prediction).
  • Falsification test: panel_fe_pmr_change_to_investment_share

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): -3.98
  • Std error: 5.821e-14
  • p-value: 0
  • Observations: 46, countries: 2
  • Within R²: -2.71
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:NE.GDI.FPRV.ZS → nonresidential_private_investment_share_gdp (outcome, publisher=world_bank_wdi, n=3304)
  • world_bank_wdi:NE.GDI.FPRV.ZS → investment_share_gdp_5y_change (outcome, publisher=world_bank_wdi, n=3304)
  • wgi:RQ.EST → regulatory_quality_wgi (treatment, publisher=wgi, n=5169)
  • world_bank_wdi:NY.GDP.PCAP.PP.KD → log_gdp_pc_ppp (controls, publisher=world_bank_wdi, n=8325)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)

Variables missing data

  • oecd_pmr:overall_score (treatment, name=oecd_pmr_overall_score) — vintage not on disk
  • oecd_pmr:overall_score (treatment, name=oecd_pmr_yoy_change) — vintage not on disk
  • bis:WS_LTRT (controls, name=real_long_term_yield) — vintage not on disk
  • oecd:output_gap_eo (controls, name=output_gap) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:54:29+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Hayek (1944 The Road to Serfdom, ch.6 on planning vs rule of law; 1960 Constitution of Liberty on the rule of law as a generality constraint). Modern empirical adjacents: Bloom-Bond-Van Reenen on uncertainty and investment, Davis-Baker policy-uncertainty literature.

Authored framework. Read the transparency note.