Regulatory impact analysis
The regulatory impact analysis conducted by the EY Economic Analysis Team assesses the impact of an existing regulation (so called ex post analysis) or a planned regulation (so called ex ante analysis) on the national and local economy or a specific economic sector.
What EY can do for you
EY EAT can estimate an economic impact of regulations in various areas, such as: tax policy, entrepreneurship and competition, labour market, social security system, environment and climate change, sectorial policies, etc.
Depending on the characteristics of a given regulation and the Client’s needs, EY EAT can conduct a qualitative or quantitative assessment of the regulation’s impact on:
- Demand/supply - e.g. what will be the impact of a new regulation on the supply of renewable energy?
- Public finance - e.g. what is the “optimal” excise tax policy for a given product from the public finance perspective, i.e. a policy that increases tax revenues while keeping the outflow of customers to substitute products and/or illicit market at a relatively low level?
- Value added - e.g. what is the impact on production/value added in the whole economy of underinvestment in prevention of a certain disease?
- Labour market - e.g. what is the impact of an increase in the national minimum wage on the legal and unregistered employment?
- Prices - e.g. who will bear the cost of the new tax burden (customers, sellers or suppliers)?
- Other economic variables - e.g. foreign direct investment, foreign trade, cost of public debt servicing, turnover in the financial markets, volatility of the market
In our approach to regulatory impact assessment we emphasize the transparency principle: in our analyses we present not only results of the analysis, but also our approach (method of measurement, key assumptions, etc.). We are also ready to engage in an open and in-depth discussion with stakeholders, including the regulator, about various aspects of our analyses.
- Delivers the assessment on how the conditions of the Client’s business activity will change after the new legislative changes come into effect
- Indicates economic and social threats to the economy associated with the considered regulation
- Contributes to communication with stakeholders (incl. regulators and media) on the economic impact of regulatory changes
- Supports the development of regulatory solutions that limit negative effects for the company, sector or economy, while increasing benefits for the society or general government (the so called win-win solutions
EY EAT provides comprehensive solutions in the area of regulatory impact assessment, providing economic expertise as well as analytical, econometric and macroeconomic modelling skills. Our regulatory impact assessment may include, among others, the following elements:
- Basing on own experience and deep understanding of the theory of economics, EY EAT identifies main channels of the economic impact of governmental policy tools.
- Having understood the nature of a regulatory change, EY EAT assesses qualitatively or quantitatively the impact of that change through the previously identified channels. We use counterfactual simulations to analyse the behaviour of economic agents under different policies (including the so-called “business as usual” scenario).
- EY EAT can challenge the existing or proposed regulations and compare them with alternative solutions. In result, the regulatory impact analysis may contribute to development of win-win solutions (for the company, sector, economy, society and government).
- EY EAT may initiate a dialogue between the Client and regulators, during which the results of the analysis and our approach are communicated. Such cooperation supports all stakeholders in better understanding of the consequences of regulatory changes.
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