regulations appears to be the one which robustly stands out as significant. This latter result remains robust when using our alternative preferred TFP measures of Hsieh and Klenow. (See Table A10.) The estimated coefficients of Table 2 and Table A10 imply that for an average EU country, a reduction in overall services regulations to a targeted average level of the three most deregulated European economies means an increase in the level of firm productivity performance of about 2.8 percent. When breaking down the overall regulatory restrictions into entry and conduct barriers, a similar reduction in services regulation would imply an increase in the average productivity level of the firm by, respectively, 1.39 percent and 1.59 percent. Note that these numbers represent an average of the coefficients found in our preferred TFP specifications from Ackerberg and Hsieh and Klenow. In a comparable scenario in which one takes the highest coefficient outcome in Table A10, the results would imply a productivity level increase of the firm by 5.34 percent when reducing overall barriers; a 2.83 percent increase when reducing entry barriers; and a 3.38 percent increase when reducing conduct regulatory barriers. Table A11 in the annex provides more detail on these computations while Table A12 shows TFP impact results by country.

Following our discussion on using common versus country‐specific input‐output coefficients, we repeat our analysis using the EU‐wide input‐output tables. The results are presented in Table 3 and show that much less significant coefficient results are obtained. Nonetheless, they substantiate our results found in the previous table in the sense that conduct regulations are negatively significant for TFP levels using the Ackerberg specification. Results from Table 3 confirm the negative effect of conduct barriers in services on downstream TFP when entered separately (albeit weakly) and is reinforced when entered with the other regulatory services linkage variables. Other coefficient outcomes remain entirely insignificant as part of this specification. In column (6), the regulatory services linkage index for FDI now receives a negative and significant sign as well when entered next to the other regulatory variables.<sup>21</sup> In sum, although different types of regulatory measures appear to affect downstream productivity depending which TFP specification one uses, one thing that clearly stands out in this regard is that conduct regulations remains the most robust indicator that explains services reform as having an effect on the wider economy in the EU when taking both downstream services and goods into account. These results suggest that removing conduct regulations to an achievable level of the three most deregulated EU economies would increase the TFP level performance of the firm in both services and goods sectors for an average EU country by a maximum of 3.38 percent.

# **4.1 Role of Institutions**

Our regression results for the role of institutions as having a differential effect on firm‐level TFP are reported in Tables 4 and 5, all using our preferred Ackerberg measure. Tables A14 and A15 present results for the remaining three TFP specifications. In similar order, the results are presented for the country‐specific input‐output coefficients (Table 4) as well as when using EU‐wide input‐output 21 Table A13 in the annex shows the estimation results for the three remaining TFP measures and show that both the Olley and Pakes as well as the Hsieh and Klenow TFP measures provide a negative and significant sign for conduct regulations. Moreover, in Table A13 columns (15), (17) and (18) in addition show that the significance of conduct regulations corroborates our initial findings as presented in Table 2 in that it remains significant when entered separately as well as when entered together with the other regulatory variables.

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