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The Path of Liberalization and Economic Growth
Author(s) -
Pitlik Hans
Publication year - 2002
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/1467-6435.00177
Subject(s) - economics , liberalization , economic freedom , volatility (finance) , economic liberalization , index (typography) , free trade , international economics , path (computing) , macroeconomics , economic system , market economy , econometrics , world wide web , computer science , programming language
Empirical research has shown that both more economic freedom and a higher stability of policy variables are supportive for economic growth. Thus, the path of policy liberalization may have a considerable influence on a nation’s growth performance. Using the Fraser‐index of economic freedom, this article shows empirically that policy volatility proves to be growth depressing, even if the state liberalizes the economy in the long‐run. Growth is significantly higher if liberalization occurs on a smoother path.