 Economic Freedom and Economic Growth: A Short-run Causal InvestigationJournal of Applied Economics, 2000, vol. 3, 71-91 Abstract: The freedom and growth literature has consistently shown that nations which have fewer restrictions on private agents and transactions tend to higher levels of economic growth. It is less clear, however, whether freedom causes growth, growth causes freedom, or the two are jointly determined. To assess these possibilities, Granger-causality tests are performed on annual freedom indicators developed by the Heritage Foundation and national growth rates. The underlying component indexes, which include Trade Policy, Taxation, Government Intervention, Monetary Policy, Capital Flows and Foreign Investment, Banking, Wage and Price Controls, Property Rights, Regulation, and Black Markets, are also tested in addition to the summary freedom rating. The tests suggest the average level of freedom in a nation, as well as many of the specific underlying components of freedom, precedes growth. However, growth may precede one of the component indexes (Government Intervention), and no relationship is found to exist between growth and two of the indexes (Trade Policy and Taxation). Keywords: economic freedom; economic growth; Granger-causality (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:3:y:2000:n:1:p:71-91 Access Statistics for this article Journal of Applied Economics is currently edited by Germán Coloma and Mariana Conte Grand and Jorge M. Streb More articles in Journal of Applied Economics from Universidad del CEMA Contact information at EDIRC. |
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