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Which Economic Freedoms Contribute to Growth? A Comment

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  • Jan–Egbert Sturm
  • Erik Leertouwer
  • Jakob de Haan

Abstract

Most studies on the relationship between economic freedom and growth employ a measure of economic freedom based on an (ad hoc) aggregation of various underlying components. We argue that the alternative aggregation procedure as recently suggested by Heckelman and Stroup (2000) — in which aggregation is directly based upon the relevance of each component for growth, as determined by multivariate regression analysis — is seriously flawed. We present an alternative index based on latent variable estimation techniques. Using standard robustness analyses we find that this index of economic freedom is not robustly related to economic growth.

Suggested Citation

  • Jan–Egbert Sturm & Erik Leertouwer & Jakob de Haan, 2002. "Which Economic Freedoms Contribute to Growth? A Comment," Kyklos, Wiley Blackwell, vol. 55(3), pages 403-416, August.
    • Handle: RePEc:bla:kyklos:v:55:y:2002:i:3:p:403-416
    DOI: 10.1111/1467-6435.00193
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