Economic Freedom, Pandemics and Robust Political Economy

Abstract

What is the relationship, if any, between economic freedom and pandemics? This paper addresses this question from a robust political economy approach. As is the case with recovery from natural disasters or warfare, a society that is relatively free economically will embody institutional arrangements with greater flexibility and adaptiveness to pandemics. We argue that societies that are more economically free will be more robust to the impact from pandemics, illustrated by shorter time for economic recovery. We illustrate this relationship by testing how initial levels economic freedom (at the start of the major influenza pandemics of the 20th century) temper contractions and accelerate recoveries for 20 OECD countries.

Keywords: Economic Freedom; Pandemics; Robust Political Economy

JEL Classification: B51, H12, P52