The Determinants of Economic Freedom: A Survey

Lawson, Robert A.; Murphy, Ryan; Powell, Benjamin

doi:10.1111/coep.12471

Cited by 58 publications

(40 citation statements)

References 115 publications

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“…There is a considerable amount of evidence that economic freedom is linked to desirable outcomes, including higher income growth and subjective well‐being (Hall & Lawson, 2014). 1 Motivated by this evidence, a growing literature seeks to identify the determinants of economic freedom (Lawson et al, 2020). Within this literature, scholars have tended to focus on economic variables and deep historical (or otherwise‐exogenous) factors 2 .…”

Section: Introductionmentioning

confidence: 99%

Does constitutional entrenchment matter for economic freedom?

Callais

Young

2021

Contemporary Economic Policy

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A growing number of studies explore the determinants of economic freedom. Very few of them consider constitutional design. We study entrenchment, that is, the extent to which constitutions are more costly to change than ordinary policies and institutions. We utilize 1970–2017 data and study episodes where countries adopted meaningfully more entrenched constitutions. Using matching methods, we construct plausible counterfactuals against which to compare their post‐treatment changes in economic freedom. We report no significant effects on overall freedom. There is some evidence that entrenchment leads to smaller government size, more regulation, and weaker property rights. However, none of these results are robust.

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Section: Introductionmentioning

confidence: 99%

Does constitutional entrenchment matter for economic freedom?

Callais

Young

2021

Contemporary Economic Policy

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“…Of course, it is expected that each country presents a “combination of freedoms”. Recently, Lawson et al [ 17 ] have reviewed the determinants of EF, with a time dependent point of view. Some of the most consistent findings are that current levels of EF are strongly correlated with past levels.…”

Section: Economic Freedom Indicesmentioning

confidence: 99%

Economic Freedom: The Top, the Bottom, and the Reality. I. 1997–2007

Ausloos

Bronlet²

2021

Entropy

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We recall the historically admitted prerequisites of Economic Freedom (EF). We have examined 908 data points for the Economic Freedom of the World (EFW) index and 1884 points for the Index of Economic Freedom (IEF); the studied periods are 2000–2006 and 1997–2007, respectively, thereby following the Berlin wall collapse, and including 11 September 2001. After discussing EFW index and IEF, in order to compare the indices, one needs to study their overlap in time and space. That leaves 138 countries to be examined over a period extending from 2000 to 2006, thus 2 sets of 862 data points. The data analysis pertains to the rank-size law technique. It is examined whether the distributions obey an exponential or a power law. A correlation with the country’s Gross Domestic Product (GDP), an admittedly major determinant of EF, follows, distinguishing regional aspects, i.e., defining 6 continents. Semi-log plots show that the EFW-rank relationship is exponential for countries of high rank (≥20); overall the log–log plots point to a behaviour close to a power law. In contrast, for the IEF, the overall ranking has an exponential behaviour; but the log–log plots point to the existence of a transitional point between two different power laws, i.e., near rank 10. Moreover, log–log plots of the EFW index relationship to country GDP are characterised by a power law, with a rather stable exponent (γ≃0.674) as a function of time. In contrast, log–log plots of the IEF relationship with the country’s gross domestic product point to a downward evolutive power law as a function of time. Markedly the two studied indices provide different aspects of EF.

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“…The first precursor literature is the developing research programme which investigates the origins and causes of liberal market institutions, especially as measured by the Economic Freedom of the World index (Gwartney, Lawson, Hall, & Murphy, 2019). This research has been summarised by Lawson, Murphy, and Powell (2018). Specifically, a small part of this literature addresses whether crises, variously defined, increase or decrease economic freedom (de Haan, Sturm, & Zandberg, 2009;O'Reilly & Powell, 2015;Stocker, 2016;Young & Bologna, 2016;Murphy & Smith, 2018;Bjornskov & Rode, 2019).…”

Section: Preliminariesmentioning

confidence: 99%

Does democracy die in recessions? A descriptive analysis of aggregate demand shortfalls and regime transition

Murphy

2020

Economic Affairs

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Can a central bank accidentally provoke changes to a country's political regime? Sumner (2015) proposes that macroeconomic mismanagement on the part of central bank authorities, leading to declines in nominal output, can cause voters to respond with populism at the ballot box. Murphy and Smith (2018) have found evidence for this hypothesis, with populism interpreted as movements away from liberal market institutions. This article extends the hypothesis to macroeconomic mismanagement and its relationship with democratic political institutions. It finds both that recessions foreshadow a lower probability of a dictatorship becoming a democracy, and that a democracy is more likely to become a dictatorship. The relationship with autocratisation is most visible after 15 years, while the negative relationship with democratisation is far more persistent over time. These findings, it must be stressed, are historical and descriptive, not necessarily causal. K E Y W O R D S autocracy, behavioural political economy, democracy, democratisation, market monetarism J E L C L A S S I F I C A T I O N D72; P16; E30

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The Determinants of Economic Freedom: A Survey

Cited by 58 publications

References 115 publications

Does constitutional entrenchment matter for economic freedom?

Does constitutional entrenchment matter for economic freedom?

Economic Freedom: The Top, the Bottom, and the Reality. I. 1997–2007

Does democracy die in recessions? A descriptive analysis of aggregate demand shortfalls and regime transition

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