Economic freedom and economic crises

Christian Bjørnskov

European Journal of Political Economy, 2016, vol. 45, issue S, 11-23

Abstract: 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.

Keywords: Crisis; Economic freedom; Institutions (search for similar items in EconPapers)
JEL-codes: O11 O43 P16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (31)

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Related works:
Working Paper: Economic Freedom and Economic Crisis (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:45:y:2016:i:s:p:11-23

DOI: 10.1016/j.ejpoleco.2016.08.003

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