IDEAS home Printed from https://ideas.repec.org/a/eme/jfeppp/jfep-11-2016-0086.html
   My bibliography  Save this article

Growth-enhancing economic freedom

Author

Listed:
  • Sriparna Ghosh
  • Bryan C. McCannon

Abstract

Purpose - We explore how economic freedom measurements can be used to guide policy. Design/methodology/approach - We propose a method for creating a growth-enhancing economic freedom index, which allows for nonlinearities and interaction effects between the components to economic freedom. We use this method to illustrate that US states differ in which policy area generates the greatest gains. Findings - To validate the method presented, we apply our index to state bond markets. Financial market participants have the incentive to properly evaluate states’ policies. If our measurement is useful, then it should correlate with bond ratings. Consistent with this hypothesis, we present evidence that state bond ratings are strongly correlated with our growth-enhancing economic freedom index. Originality/value - It has been well-established that economic freedom is associated with good economic outcomes. Economic freedom is comprised of numerous dimensions. Thus, the marginal benefit of improving policy in one area can be expected to depend on the amount of freedom in the other dimensions. Which policy improvement is most impactful depends on the entire menu of current policies and, therefore, differs between states. Our new method can then be used as a guide to determining for a particular state which policies can be expected to impact economic well-being the most.

Suggested Citation

  • Sriparna Ghosh & Bryan C. McCannon, 2017. "Growth-enhancing economic freedom," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 9(02), pages 209-224, May.
    • Handle: RePEc:eme:jfeppp:jfep-11-2016-0086
    DOI: 10.1108/JFEP-11-2016-0086
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JFEP-11-2016-0086/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/JFEP-11-2016-0086/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/JFEP-11-2016-0086?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gouider, Abdessalem & Nouira, Ridha & Saafi, Sami, 2022. "Re-Exploring the Nexus Between Economic Freedom and Growth: Is There a Threshold Effect?," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(3), pages 147-167, September.
    2. Bryan C. McCannon & Joshua C. Hall, 2021. "Stay‐at‐home orders were issued earlier in economically unfree states," Southern Economic Journal, John Wiley & Sons, vol. 87(4), pages 1138-1151, April.
    3. Cebula, Richard J. & Connaughton, John E. & Swartz , Caroline, 2020. "Right-to-Work Laws as Economic Freedom: Their Role in Influencing the Geographic Pattern of Manufacturing Jobs, Incomes, and Finances," American Business Review, Pompea College of Business, University of New Haven, vol. 23(2), pages 431-450, November.

    More about this item

    Keywords

    Government policy and regulation; Financial economics; Economics of regulation; Bond interest rates; H7; E61; P1;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jfeppp:jfep-11-2016-0086. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.