The relationships between economic freedom, income inequality, and economic growth: empirical evidence from an asymmetric analysis in the case of Greece

Antonis Tsitouras () and Harry Papapanagos ()
Additional contact information
Antonis Tsitouras: University of Western Macedonia
Harry Papapanagos: University of Macedonia

Portuguese Economic Journal, 2025, vol. 24, issue 3, No 4, 419-454

Abstract: Abstract Single-country studies on the relationship between economic freedom, income disparity, and economic growth are rare, especially investigations on developed economies. This research examines the case of Greece using the nonlinear autoregressive distributed lag (NARDL) method and the Toda-Yamamoto causality test. The findings suggest that prioritizing economic freedom as a long-term goal can reduce income inequality, but per capita income growth promotes equality faster in the medium term. Asymmetric results indicate only positive changes in the impact of economic freedom on income equality in the long run. Additionally, the findings suggest that income inequality negatively affects per capita income in both the short and long term. A rise in the Economic Freedom Index has a negative medium-term impact on Greece's growth but can drive long-term growth. Notably, positive changes in economic freedom increase per capita income, while negative changes decrease it, with negative shocks having a greater destabilizing effect. The main implication that constantly emerges from our empirical investigation is that, in countries where economic freedom is below a certain threshold, even minor reforms promoting economic freedom can effectively reduce income disparity and foster economic growth after an intermediate period.

Keywords: Economic Freedom; Income Inequality; Economic Growth; NARDL (search for similar items in EconPapers)
JEL-codes: C32 E02 F43 P46 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10258-025-00269-w Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:portec:v:24:y:2025:i:3:d:10.1007_s10258-025-00269-w

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10258/PS2

DOI: 10.1007/s10258-025-00269-w

Access Statistics for this article

Portuguese Economic Journal is currently edited by Luís F. Costa

More articles in Portuguese Economic Journal from Springer, Instituto Superior de Economia e Gestao
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().