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Economic Freedom and Growth: A Panel Cointegration Approach

Bernur Acikgoz Author-Email: Bernur@gmail.com, Anthony Amoah Author-Email: A.amoah@uea.ac.uk and Mine Yılmazer Author-Email: Mine.yilmazer@cbu.edu.tr
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Bernur Acikgoz Author-Email: Bernur@gmail.com: Corresponding author School of Applied Sciences, Celal Bayar University, Turkey
Anthony Amoah Author-Email: A.amoah@uea.ac.uk: University of East Anglia, UK; Central University College, Ghana
Mine Yılmazer Author-Email: Mine.yilmazer@cbu.edu.tr: School of Applied Sciences, Celal Bayar University, Turkey

Panoeconomicus, 2016, vol. 63, issue 5, 541-562

Abstract: This study uses three-country group panel data from 1993 to 2011 in examining the long-run effect of tax burdens (fiscal freedom index) and gov- ernment regulations of business (business freedom index) on economic growth. The outcome of the panel cointegration approach suggests that the variables have a long-run relationship with economic growth. The study finds all the signs of the variables used to be consistent with theoretical expectations. Regarding the variables of interest, it is also found that the fiscal freedom has a positive and significant effect on economic growth for all three-country groups. In addition, the business freedom has a positive and significant effect for only two-country groups. The study finds that tax burdens and government regula- tions play an important role on economic growth for most countries in the sam- ple. To harness economic growth prospects, the study offers recommendations for policy makers to consider.

Keywords: Business freedom; Fiscal freedom; Tax burden; Economic growth; Panel cointegration (search for similar items in EconPapers)
JEL-codes: E02 E44 F41 H10 P12 (search for similar items in EconPapers)
Date: 2016
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