Proxies for Economic Freedom: A Critique of the Hanson Critique
AbstractEconomic freedom indicators have become quite popular recently as a useful tool to quantify the relationship between a country's institutions and its prosperity. In a recent article, Hanson (2003) criticizes these types of studies for: (i) failing to adequately distinguish between different proxies for economic freedom, (ii) not considering the potential for endogeneity, and (iii) accepting significance of economic freedom's ability to promote prosperity even though regression analysis generates “nonsensical” results. Closer inspection reveals that most of his arguments are questionable, do not apply to much of the literature, or are not original, and that he is guilty of misinterpreting his own econometric evidence relating freedom to the level of GDP.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 72 (2005)
Issue (Month): 2 (October)
Find related papers by JEL classification:
- B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
- C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
- H19 - Public Economics - - Structure and Scope of Government - - - Other
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- Thomas A. Garrett & Russell M. Rhine, 2011.
"Economic freedom and employment growth in U.S. states,"
Federal Reserve Bank of St. Louis, issue Jan, pages 1-18.
- Thomas A. Garrett & Russell M. Rhine, 2010. "Economic freedom and employment growth in U.S. states," Working Papers 2010-006, Federal Reserve Bank of St. Louis.
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