Working Paper: CEPR ID: DP9918
Authors: Leandro Prados de la Escosura
Abstract: This paper presents historical indices for the main dimensions of economic freedom and an aggregate index for nowadays developed countries -(pre-1994) OECD, for short-. Economic liberty expanded over the last one-and-a-half centuries, reaching two thirds of its maximum possible. Its evolution has been, however, far from linear. After a substantial improvement since mid-nineteenth century, World War I brought a major setback. The post-war recovery up to 1929 was followed by a dramatic decline in the 1930s and significant progress took place during the Golden Age but fell short from the pre-World War I peak. A steady expansion since the early 1980s has resulted in the highest levels of economic liberty of the last two centuries. Each main dimension of economic freedom exhibited a distinctive trend and its contribution to the aggregate index varied over time. Nonetheless, improved property rights provided the main contribution to the long-run advancement of economic liberty.
Keywords: economic liberty; negative freedom; OECD
JEL Codes: N10; O17; P10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Economic liberty has expanded significantly over time (P19) | Economic freedom (P19) |
| World War I (N44) | Economic freedom (P19) |
| Post-war recovery up to 1929 (N14) | Economic freedom (P19) |
| Economic events in the 1930s (N94) | Economic freedom (P19) |
| Golden age of capitalism (P12) | Economic freedom (P19) |
| Improved property rights (P14) | Economic liberty (P19) |
| Trade policies (F13) | Economic freedom (P19) |
| Interwar decline (N13) | Economic freedom (P19) |
| Post-1950 recovery (E65) | Economic freedom (P19) |