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The Nexus between Improvements in Economic Freedom and Growth: Evidence from CEE Countries in Transition

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  • Henryk Gurgul

    (AGH University of Science)

  • Łukasz Lach

    (AGH University of Science)

Abstract

This study examines the causal links between improvements in economic freedom and changes in GDP per capita of new EU members in transition in the period 2000-2009. The empirical results suggest significant causality running from changes in monetary and fiscal freedom, trade openness, regulation of credit, labour, and business, legal structure and security of property rights, and access to sound money to movements in GDP per capita, especially in less and moderately developed CEE transition countries. Moreover, we find evidence that improvements in economic freedom are one of the main factors stimulating the convergence of these economies towards rich EU members. The evidence of causality in the opposite direction is much weaker.

Suggested Citation

  • Henryk Gurgul & Łukasz Lach, 2011. "The Nexus between Improvements in Economic Freedom and Growth: Evidence from CEE Countries in Transition," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 3(3), pages 133-168, September.
  • Handle: RePEc:psc:journl:v:3:y:2011:i:3:p:133-168
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    More about this item

    Keywords

    economic growth; economic freedom; CEE transition economies;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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