Deregulation's supply-side boost supports monetary policy easing

Federal Reserve Governor Stephen I. Miran commended Greece's remarkable recovery from the 2009 crisis, attributing it to substantial deregulatory reforms.

These included liberalizing product and service markets, easing licensing burdens, opening restricted professions, and increasing labor market flexibility.

The government also privatized utilities and reformed business laws.

These actions supported a return to economic growth, reduced unemployment to its lowest level since the Global Financial Crisis, and boosted investment and exports.

Miran emphasized that by easing the ability of supply to respond to prices, these reforms improved the transmission of monetary policy.

Long-term Greek borrowing rates narrowed their spread to Germany's, falling below 1 percent from 6 percent a decade ago.

Miran argued that well-targeted deregulatory reforms expand the economy's productive capacity, fostering sustained growth without inflationary pressure.

This supports continued easing of restrictive monetary policy.

He believes ongoing deregulation in the United States will significantly boost competition, productivity, and potential growth.

A key challenge for central bankers is measuring aggregate regulatory burden, which varies by sector and jurisdiction.

Traditional methods, like counting pages or work hours, often fail to capture the full opportunity cost.

However, advances in natural language processing and artificial intelligence are improving quantification, with some measures indicating a substantial drop in rules in 2025. Miran estimates 30 percent of U.S. regulatory restrictions could be eliminated by 2030.