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The Impact of Economic Freedom on Per Capita Real GDP: A Study of OECD Nations

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  • Cebula, Richard J.
  • Clark, J.R.
  • Mixon, Franklin G., Jr.

Abstract

This study of the impact of economic freedom on per capita real GDP among OECD nations over the 2002-2006 period, with each OECD nation during this time frame being treated as a de facto “economic region” within the OECD, finds strong initial support for the hypothesis proffered here, namely, the higher the degree of economic freedom, the higher the level of economic activity and hence the higher the per capita real GDP level. In particular, the per capita real GDP level in each of the nations (regions) in existence as OECD members (except Iceland) over the study period is shown, using fixed-effects PLS estimations, to be an increasing function of business freedom, freedom from corruption, investment freedom, monetary freedom, government size freedom, trade freedom, and property rights freedom. By contrast, these preliminary estimations find that labor freedom, financial freedom, and fiscal freedom do not exercise a statistically significant impact on per capita real GDP (income).

Suggested Citation

  • Cebula, Richard J. & Clark, J.R. & Mixon, Franklin G., Jr., 2013. "The Impact of Economic Freedom on Per Capita Real GDP: A Study of OECD Nations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 43(1).
    • Handle: RePEc:ags:jrapmc:243946
    DOI: 10.22004/ag.econ.243946
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    Cited by:

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    2. Cebula, Richard & Clark, Jeff, 2014. "Economic Freedom, Regulatory Quality, Taxation, and Living Standards," MPRA Paper 58108, University Library of Munich, Germany.
    3. Mingyang Li & Subal C. Kumbhakar, 2022. "Do institutions matter for economic growth?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(4), pages 465-485, December.
    4. Hali̇l İbrahi̇m Aydin & Omer Yalcinkaya, 2017. "Effects Of The Economic Freedoms On The Economic Growth: Evidence From The Eu And Comcec Countries (1996-2015)," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 12-25, June.
    5. Kutnyi, Oleh, 2023. "The Effect of Geopolitical Region and Development Level on the Relationship Between Economic Freedom and Happiness," MPRA Paper 119620, University Library of Munich, Germany.
    6. Polyzos, Efstathios & Kuck, Simon & Abdulrahman, Khadija, 2022. "Demographic change and economic growth: The role of natural resources in the MENA region," Research in Economics, Elsevier, vol. 76(1), pages 1-13.
    7. Foley, Maggie & Clark, J.R., 2016. "Economic Freedom and Real Income," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(1).
    8. Keshab Bhattarai, 2016. "Growth and Income Distributions in Four EU Economies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(3), pages 263-277, August.
    9. Rosemarie Fike, 2023. "Do disruptions to the market process corrupt our morals?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 36(1), pages 99-106, March.
    10. Cebula, Richard J. & Foley, Maggie & Capener, Don, 2015. "The Impact of Economic Freedom on the Unemployment Rate in O.E.C.D. Nations: An Exploratory Study Accepting the Validity of Okun’s Law - L’impatto della libertà economica sul tasso di disoccupazione n," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 68(4), pages 423-436.
    11. Cebula, Richard & Clark, Jeff, 2014. "Impact of Economic Freedom, Regulatory Quality, and Taxation on the Per Capita Real Income: An Analysis for OECD Nations and Non-G8 OECD Nations," MPRA Paper 56605, University Library of Munich, Germany.
    12. Joshua C. Hall & Donald J. Lacombe & Timothy M. Shaughnessy, 2019. "Economic Freedom And Income Levels Across U.S. States: A Spatial Panel Data Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 40-49, January.
    13. Gouider, Abdessalem & Nouira, Ridha & Saafi, Sami, 2022. "Re-Exploring the Nexus Between Economic Freedom and Growth: Is There a Threshold Effect?," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(3), pages 147-167, September.
    14. Cebula, Richard & Foley, Maggie, 2017. "The Effect of Labor Market Freedom and other Factors on US Settlement Pattern Decisions, 2012 and 2014," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 70(2), pages 133-152.
    15. Irina Georgescu & Jani Kinnunen, 2019. "Well-Being and Economic Freedoms in OECD," Book chapters-LUMEN Proceedings, in: Camelia Ignatescu (ed.), 12th LUMEN International Scientific Conference Rethinking Social Action. Core Values in Practice | RSACVP 2019 | 15-17 May 2019 | Iasi – Romania, edition 1, volume 9, chapter 11, pages 108-125, Editura Lumen.
    16. Daniel L. Bennet, 2016. "Subnational Economic Freedom and Performance in the United States and Canada," Cato Journal, Cato Journal, Cato Institute, vol. 36(1), pages 165-185, Winter.
    17. Richard J. Cebula, 2016. "Do Regional Differentials in Economic Freedom Yield Regional Unemployment Rate Differentials in the U.S.? A Brief Exploratory Note Adopting Panel Data Analysis," Econometrics Letters, Bilimsel Mektuplar Organizasyonu (Scientific letters), vol. 3(1), pages 11-25.
    18. Bologna, Jamie, 2014. "A Spatial Analysis of Entrepreneurship and Institutional Quality: Evidence from U.S. Metropolitan Areas," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(2).
    19. Walden, Michael L., 2014. "Recovery from the Great Recession: Explaining Differences Among the States," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(2).

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    Keywords

    Community/Rural/Urban Development; International Development; Public Economics;
    All these keywords.

    JEL classification:

    • P12 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Enterprises
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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