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Economic freedom and economic crises

Listed author(s):
  • Bjørnskov, Christian

In this paper, I explore the politically contested association between the degree of capitalism, captured by measures of economic freedom, and the risk and characteristics of economic crises. After offering some brief theoretical considerations, I estimate the effects of economic freedom on crisis risk in the post-Cold War period 1993–2010. I further estimate the effects on the duration, peak-to-trough GDP ratios and recovery times of 212 crises across 175 countries within this period. Estimates suggest that economic freedom is robustly associated with smaller peak-to-trough ratios and shorter recovery time. These effects are driven by regulatory components of the economic freedom index.

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File URL: http://www.sciencedirect.com/science/article/pii/S0176268016301082
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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 45 (2016)
Issue (Month): S ()
Pages: 11-23

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Handle: RePEc:eee:poleco:v:45:y:2016:i:s:p:11-23
DOI: 10.1016/j.ejpoleco.2016.08.003
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505544

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