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Economic Growth, Economic Freedom, and Governance

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  • Cebula, Richard
  • Ekstrom, Marcus

Abstract

This exploratory study examines the impact of various forms of economic freedom and various dimensions of governance, as well as a number of economic factors, on economic growth among OECD nations. Empirical estimation finds that the natural log of per capita purchasing-power-parity adjusted real GDP in OECD nations is positively impacted by business freedom, monetary freedom, trade freedom, and property rights security. Economic growth is found to be negatively affected by perceived government corruption while being positively impacted by both control of corruption and political stability. Other findings indicate that higher unemployment rates and higher long term nominal interest rates inhibit economic growth, while net export growth enhances economic growth.

Suggested Citation

  • Cebula, Richard & Ekstrom, Marcus, 2008. "Economic Growth, Economic Freedom, and Governance," MPRA Paper 56702, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56702
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    References listed on IDEAS

    as
    1. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
    2. Keith M. Carlson & Roger W. Spencer, 1975. "Crowding out and its critics," Review, Federal Reserve Bank of St. Louis, vol. 57(Dec), pages 2-17.
    3. Cebula, Richard J., 1995. "The impact of federal government budget deficits on economic growth in the united states: an empirical investigation, 1955-1992," International Review of Economics & Finance, Elsevier, vol. 4(3), pages 245-252.
    4. Arthur Goldsmith, 1995. "Democracy, property rights and economic growth," Journal of Development Studies, Taylor & Francis Journals, vol. 32(2), pages 157-174.
    5. Belton, Willie & Cebula, Richard, 1992. "Budget Deficits and Economic Growth," MPRA Paper 61413, University Library of Munich, Germany.
    6. Selcuk Akcay, 2006. "Corruption and Human Development," Cato Journal, Cato Journal, Cato Institute, vol. 26(1), pages 29-48, Winter.
    7. repec:bla:kyklos:v:31:y:1978:i:3:p:424-36 is not listed on IDEAS
    8. Jac C. Heckelman, 2000. "Economic Freedom and Economic Growth: A Short-run Causal Investigation," Journal of Applied Economics, Universidad del CEMA, vol. 3, pages 71-91, May.
    9. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    10. Richard J. Cebula*, 1978. "An Empirical Analysis Of The “Crowding Out” Effect Of Fiscal Policy In The United States And Canada," Kyklos, Wiley Blackwell, vol. 31(3), pages 424-436, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Cebula, Richard J. & Clark, J.R. & Mixon, Franklin G., Jr., 2013. "The Impact of Economic Freedom on Per Capita Real GDP: A Study of OECD Nations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 43(1).

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    More about this item

    Keywords

    economic growth; select economic freedoms; dimension of governance;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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