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The effect of economic freedom on growth revisited: New evidence on causality from a panel of countries 1970-1999

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  • Justesen, Mogens K.
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    Abstract

    Does economic freedom cause economic growth or does causality run in the reverse direction? And do all the constituent parts of economic freedom exert a causal impact on economic growth or do some freedoms matter more than others? In order to answer these questions, this paper conducts a series of Granger causality tests using panel data for the period 1970-1999. In addition, the paper discusses a number of model specification issues, e.g. lag-length selection and the importance of intervening variables. The results suggest that some (but not all) aspects economic freedom affect economic growth and investment. On the other hand, there is only weak evidence that growth affects economic freedom.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Political Economy.

    Volume (Year): 24 (2008)
    Issue (Month): 3 (September)
    Pages: 642-660

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    Handle: RePEc:eee:poleco:v:24:y:2008:i:3:p:642-660

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    Web page: http://www.elsevier.com/locate/inca/505544

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Economic Freedom In Decline
      by Matt Mitchell in Neighborhood Effects on 2011-09-20 14:42:11
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    Cited by:
    1. Niklas Potrafke, 2011. "Economic Freedom and Government Ideology Across the German States," Working Paper Series of the Department of Economics, University of Konstanz 2011-41, Department of Economics, University of Konstanz.

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