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How much economic freedom is necessary for economic growth? Theory and evidence

  • Morris Altman

    ()

    (University of Saskatchewan)

The hypothesis that economic freedom and related variables are significant determinants of real per capita income and growth is critically evaluated. Economic freedom is found necessary for higher levels of per capita income and growth largely in terms of threshold effects as opposed to persistent marginal effects. More economic freedom does not appear to yield higher levels of per capita income. And securing particular levels of economic freedom does not guarantee higher levels of per capita income or growth. Secure private property rights is found to be a most significant positive causal variable as is sound money, whereas moderate amounts of labor regulation and big government are not found to be bad for the economy. Also, good corporate governance, in addition to economic freedom, is of considerable import. Unlike most studies, traditional statistical methods are supplemented by graphical analysis in an effort to determine threshold values for economic freedom and its components.

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File URL: http://www.accessecon.com/pubs/EB/2008/Volume15/EB-07O10037A.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 15 (2008)
Issue (Month): 2 ()
Pages: 1-20

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Handle: RePEc:ebl:ecbull:eb-07o10037
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  1. Ziliak, Stephen T. & McCloskey, Deirdre N., 2004. "Size matters: the standard error of regressions in the American Economic Review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(5), pages 527-546, November.
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  3. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth
    [One Economics, Many Recipes: Globalization, Institutions, and Economic Growth]
    ," Introductory Chapters, Princeton University Press.
  4. Davies, Antony & Quinlivan, Gary, 2006. "A panel data analysis of the impact of trade on human development," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 868-876, October.
  5. Leibenstein, Harvey, 1979. "A Branch of Economics is Missing: Micro-Micro Theory," Journal of Economic Literature, American Economic Association, vol. 17(2), pages 477-502, June.
  6. Stephen T. Ziliak & Deirdre N. McCloskey, 2004. "Size Matters: The Standard Error of Regressions in the American Economic Review," Econ Journal Watch, Econ Journal Watch, vol. 1(2), pages 331-358, August.
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