Working Paper: CEPR ID: DP18187
Authors: Leandro Prados de la Escosura
Abstract: This paper analyses economic freedom for a sample of 21 OECD countries over the past 170 years on the basis of a new thoroughly revised Historical Index of Economic Liberty (HIEL). Long-term gains in economic freedom reached two-thirds of its potential maximum. The expansion of economic freedom was abruptly interrupted by the world wars and resumed after 1950, to peak in 2000 and stagnate thereafter. International openness has been its main contributing dimension, especially after 1950. Stability in the country ranking coexisted with a narrowing of the distance between countries’ levels of economic freedom.
Keywords: economic freedom; openness; regulation; OECD
JEL Codes: E31; N40; O24; P14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased international openness (F69) | higher levels of economic freedom (P19) |
| time (C41) | economic freedom levels (P19) |
| historical events (such as world wars) (N44) | interrupted growth in economic freedom (F69) |
| stability in country rankings of economic freedom (O57) | narrowing of distance between countries' levels of economic freedom (F69) |
| gains in economic freedom (1850-2007) (P19) | smaller in new HIEL compared to old index (C43) |
| property rights (P14) | main driver of economic freedom in old index (E02) |