The Impact of Economic Freedom on Economic Growth

Al–Katout, Fayrouz; Bakir, Amir

doi:10.11648/j.ijber.20190806.27

Cited by 4 publications

(1 citation statement)

References 6 publications

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“…The positive impact of liberalization on trade has also been proven. After Gehring (2013) studied 86 countries and Al–Katout and Bakir (2019) studied 42 countries, they stated that EF positively impacted subjective well‐being and economic growth, respectively. These positive effects are due to the removal of the regulatory burden.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corruption and corporate leverage in an emerging economy: The role of economic freedom

Doan

Truong

Nguyen

et al. 2022

Ann Public Coop Econ

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This study investigated the effects of corruption and economic freedom on corporate leverage. We also evaluated how economic freedom shapes the effect of corruption on corporate leverage. Using a sample of Vietnamese firms covering a nine‐year period from 2010 to 2018, we find evidence that increased control of corruption has a significant positive impact on firm leverage, whereas the opposite is true for economic freedom. This effect is robust to alternative measures of control of corruption as well as advanced estimation methods, such as firm‐fixed effects and quantile regressions. Our results also reveal that the positive impact of corruption controls on corporate leverage is more pronounced for firms with high economic freedom. Econometrically, our findings indicate that firms with better control over corruption prefer debt financing, as demonstrated by their higher leverage ratio.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corruption and corporate leverage in an emerging economy: The role of economic freedom

Doan

Truong

Nguyen

et al. 2022

Ann Public Coop Econ

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Evaluating and Improving the Metropolitan Economic Freedom Index

Sharma,

Tomic,

Fulton

2024

Soc Indic Res

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The Metropolitan Economic Freedom Index (MEFI) ranks cities based on their support of free market enterprise. In its current state, MEFI purports to measure three constructs (government spending, taxation, and labor market freedom) with three equally weighted variables for each one, assuming perfect substitutability of variables. This study investigates the statistical consistency of MEFI through Confirmatory Factor Analysis. Multiple models investigate current variable selection by providing a potentially better indicator of labor market freedom, aggregation assumptions by removing the requirements for fixed and equal weights, and statistical consistency by evaluating the fit between the data and models. Results indicate that the current MEFI model is not statistically consistent with the data, that weighting of variables should not be equal, that variable selection should be investigated, and that constructs should be re-imagined. The models investigated provide an initial starting point for redefining MEFI.

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Impact of the government size on economic growth in the Western Balkan countries

Bajrami

Gashi

Ukshini

et al. 2022

JGR

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The Keynesian theory states that economic growth is positively affected by government spending, while Classical theory states that economic growth is negatively affected by government spending, as is stated by neoclassical public choice theorists (Nyasha & Odhiambo, 2019). Based on these theories, many authors have carried out research on the impact of economic freedom on economic growth by analyzing various empirical cases. Bergh and Karlsson (2010) with the findings from his paper confirmed that the countries with the highest government size have an elevated growth in the globalization index of KOF and the Fraser Institute’s economic freedom index. The main aim of this paper is to analyze the government size impact on the growth of the economy in the Western Balkan in the time period 2000–2017 according to Fraser Institute’s data, incorporating the following econometric models: fixed and random effects, pooled ordinary least squares (OLS), and Hausman-Taylor IV. With these models, this paper analyzes a government size and its components: government enterprises and investment, government consumption, transfers, and subsidies. The results illustrate a relationship between the size of the government and the growth of the economy in the Western Balkans that is positive. 1% increase in government size affects 0.29% gross domestic product (GDP) growth per capita. According to the Hausman-Taylor instrumental variable, 1% growth of government consumption is affected by 0.69% the decline in GDP per capita. The growth rate of transfers and subsidies affects 0.17% of GDP growth per capita and 1% of government enterprises and investment affects 0.54% GDP growth per capita.

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The Impact of Economic Freedom on Economic Growth

Cited by 4 publications

References 6 publications

Corruption and corporate leverage in an emerging economy: The role of economic freedom

Corruption and corporate leverage in an emerging economy: The role of economic freedom

Evaluating and Improving the Metropolitan Economic Freedom Index

Impact of the government size on economic growth in the Western Balkan countries

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