Decomposed Effects of Democracy on Economic Freedom

Susanna Lundström
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Susanna Lundström: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG

No 74, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Many previous empirical studies conclude that democracy increases economic freedom. However, these studies use highly aggregated indices of economic freedom, which eliminate interesting information and obstruct policy conclusions. The purpose of this study is to empirically study how different categories of economic freedom are affected by democracy in developing countries. There seems to be a positive effect of democracy on the categories Government Operations and Regulations and Restraints on International Exchange, but for the categories Money and Inflation and Takings and Discriminatory Taxation there is no effect. The robustness to extreme points and the model specification is tested.

Keywords: democracy; economic freedom; decomposition (search for similar items in EconPapers)
JEL-codes: P51 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2002-06-07
New Economics Papers: this item is included in nep-lam
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Citations: View citations in EconPapers (1)

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