The private sector arguably plays a greater role in sustainability transitions through private investment. The authors apply the four-and five-factor Fama-French models to the Dow Jones Sustainability Index (DJSI) and a range of renewable energy indices to evaluate the financial attractiveness of sustainability in general, relative to alternative investments. They find both overperformance and underperformance in the regional DJSIs over the period 2006-2016. In contrast, renewable energy indices have high betas and negative alphas, which makes them financially unattractive. These results imply the need for public support in sustainability transitions, as high risk and low return deter private investment.
In this paper, we revisit the relationship between economic freedom and growth across 407 German districts (Kreise). We build six indicators of economic freedom and cluster them into categories reflecting tax rates and size of the government and public sector. Exploiting the variation in the constructed indices of economic freedom, the evidence suggests less indebted districts with a lower share of taxes and a relatively smaller public sector achieve consistently higher growth rates and income levels. The beneficial effect of economic freedom on growth is robust to the variety of specification checks and does not appear to be driven by sample selection. The evidence does not indicate a lower level of economic freedom in former East German districts or greater economic freedom in West German districts but unveils a persistent north–south divide in the post-unification period. In the counterfactual scenario, a transition to the 90th percentile of economic freedom is associated with large income and growth gains. Such a transition would yield higher income levels and growth rates with a notable decrease in regional economic inequality within Germany.
The article argues that the economic scientific community, by disregarding the importance of freedom which was essential for its emancipation and market as its key criterion of choice, is disloyal to its own starting points and fundamental principles. By dictating strict methodological rules the neoclassical school has consolidated its monopoly position within economics. The article highlights that this methodological normativism is substantially reducing the diversity of methodological approaches and that such restriction of freedom has become a source of subordination within economic community. The author argues that today a new emancipation is needed, with a strong emphasis on the freedom to forge new approaches and acute awareness of the fact that no theoretical platform can persist without adequate demand for its findings in the science market.
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