Which Economic Freedoms Contribute to Growth? A Comment

14 Pages Posted: 2 Dec 2002

See all articles by Jan-Egbert Sturm

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich; CESifo (Center for Economic Studies and Ifo Institute)

Erik Leertouwer

Economie

Jakob de Haan

University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

Most studies on the relationship between economic freedom and growth employ a measure of economic freedom based on an (ad hoc) aggregation of various underlying components. We argue that the alternative aggregation procedure as recently suggested by Heckelman and Stroup (2000) - in which aggregation is directly based upon the relevance of each component for growth, as determined by multivariate regression analysis - is seriously flawed. We present an alternative index based on latent variable estimation techniques. Using standard robustness analyses we find that this index of economic freedom is not robustly related to economic growth.

Suggested Citation

Sturm, Jan-Egbert and Leertouwer, Erik and de Haan, Jakob, Which Economic Freedoms Contribute to Growth? A Comment. Kyklos, Vol. 55, pp. 403-416, 2002. Available at SSRN: https://ssrn.com/abstract=325132

Jan-Egbert Sturm (Contact Author)

KOF Swiss Economic Institute, ETH Zurich ( email )

Zurich
Switzerland

HOME PAGE: http://www.kof.ethz.ch

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, 81679
Germany

HOME PAGE: http://www.cesifo.de

Erik Leertouwer

Economie ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 3637075 (Phone)
+31 50 3633720 (Fax)

HOME PAGE: http://www.eco.rug.nl/medewerk/leertouwer/start.shtml

Jakob de Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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