The Correct Conception of Capital: A Reply to Baldwin Ranson

This paper assesses the economic importance and the limits of using the Economic Freedom Index (EFI) to help explain and realize higher levels of per-capita income. Specifically, I elaborate on the need to disaggregate and place the EFI into a coherent and meaningful theoretical context in order to generate economically cogent analytical predictions as well as more reasonable public policy recommendations. As it stands, the EFI can produce highly misleading causal results with potentially disastrous consequences for public policy. Hereby, I make a preliminary attempt at constructing an alternative aggregate index to measure the importance of market-related institutions for achieving higher levels of per-capita income. This alternative index, termed here the Good Capitalist Governance Index (GCGI), better correlates with per-capita income and has a higher threshold value than the Economic Freedom Index. The GCGI highlights the importance of secure private rights, limited corruption, and sound money for the realization of higher levels of per-capita income. The evidence supports the hypothesis that good capitalist governance requires a well-working, but not minimalist government.     

Endogenous economic freedom and the wealth of nations: evidence from a panel of countries, 1996–2011

Indexes of economic freedom measure the degree to which the policies and institutions of countries are supportive of economic freedom. The authors find a considerable scope for improvement in Index of Economic Freedom, created by Heritage Foundation, since not all components of index have equal effect on economic well-being. Contrary to Heritage methodology the authors tackle the aggregation bias and highlight that each index component contributes differently to the level of economic freedom and subsequently to the level of income per capita. The level of fiscal freedom and monetary freedom exert the strongest influence on the overall index of economic freedom. Authors present the new endogenous cross-country ranking of 135 countries from Instrumental Variable-Two Stage Least Squares (IV-2SLS) empirical specification which removes the inconsistencies arising from the arbitrary assumption of the equivalent effect of each component on the overall index and, hence, the level of real income per capita.     

Do liberalization and globalization increase income inequality?

Using the Standardized World Income Inequality Database, we examine if the KOF Index of Globalization and the Economic Freedom Index of the Fraser institute are related to within-country income inequality using panel data covering around 80 countries 1970–2005. Freedom to trade internationally is robustly related to inequality, also when adding several control variables and controlling for potential endogeneity using GMM. Social globalization and deregulation is also linked to inequality. Reforms towards economic freedom seem to increase inequality mainly in rich countries, and social globalization is more important in less developed countries. Monetary reforms, legal reforms and political globalization do not increase inequality.     

An ordinal ranking of economic institutions

We provide the first ranking of countries’ economic institutions using an ordinal methodology. Using the five areas of the Fraser Institute’s Economic Freedom of the World (EFW) index, we find that final rankings of a country’s institutions are sensitive to the importance-ordering of Area 1 (Size of Government). When Areas 2–5 are in the most important position, we find that there is no significant difference between the EFW rankings and our rankings. When Area 1 is placed in the most important position, however, a number of European countries with large welfare states but good governance do poorly.     

Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates

This paper investigates recent claims that ‘neoliberal’ policies and reforms are associated with higher homicide rates and other types of crime. Using a panel of the 50 US states observed between 1981 and 2011 and the Economic Freedom Index of the Fraser Institute, results show that there is no direct association between changes in economic policies as measured by this index and homicide rates. The results nevertheless show that other non-violent types of crime decrease with spending or tax policy.     

Aggregate demand shortfalls and economic freedom

Political instability is often exacerbated in periods of aggregate demand shortfall. It has been conjectured that inadequate policy responses to recessions may be inimical to free economic institutions. This paper uses the Economic Freedom of the World index as its measure of economic institutions, and finds that the change in economic freedom in the following five, ten, and fifteen years is negatively impacted by an aggregate demand shortfall as measured by negative NGDP growth.     

Judicial independence and economic freedom in the US states

This article addresses the extent to which differences in judicial independence across US states influence economic freedom by using the Fraser Institute’s Economic Freedom of North America Index. Overall, the results suggest that, as judicial independence increases within a state’s court of last resort, so does a state’s overall economic freedom score, along with each of the subcomponent index scores. These findings add important nuances to the literature and provide opportunities for future research.     

环境规制、能源要素价格与绿色创新效率 ——以长江经济带为例

以“共抓大保护、不搞大开发”为导向推动长江经济带发展,需掌握不同环境规制类型与能源要素价格对长江经济带绿色创新的影响。本文运用面板门槛回归模型聚焦讨论能源要素价格与不同环境规制类型对长江经济带绿色创新效率的影响。研究结果表明:命令控制型环境规制和市场激励型环境规制显著抑制了长江经济带绿色创新效率,不支持“波特假说”;自愿型环境规制显著提高了长江经济带绿色创新效率,验证了“波特假说”。环境规制对长江经济带绿色创新存在显著的空间异质性,且在能源要素价格的不同区间下环境规制带来的影响具有明显差异。不同环境规制下的能源要素价格指标函数均不一致,但存在交叉区间,而在主要环境规制类型下能源要素价格对长江经济带绿色创新效率的影响显著为负。控制变量的研究表明,产业结构和产业规模均在一定程度上显著地积极影响长江经济带绿色创新效率,而社会购买力在一定程度削减了长江经济带绿色创新效率。因此,政府需要进一步深化能源价格市场化改革,多角度、差异化实施环境规制行为,共同发挥社会团体对绿色创新的影响。     

The effects of federal regulations on corruption in U.S. States

Using the newly constructed Federal Regulation and State Enterprise Index (FRASE Index) to measure the federal regulations and the existing Corruption Convictions Index (CCI), we investigate the effects of federal regulations on corruption in U.S. states. Controlling for several demographic and economic variables including the Fraser Institute’s Economic Freedom Index (EFI), which measures the size and scope of government in U.S. states, we find a positive and statistically significant relationship between federal regulations and corruption. Our findings have important policy implications. A 1 standard deviation increase in FRASE Index causes CCI to increase by approximately 0.5 standard deviations. Standardized coefficient of EFI is also approximately equal to 0.5. In other words, it is possible to mitigate the effects of regulations at the federal level by reducing the size and the scope of the government at the state level.     

Immigration and economic freedom of the US states: Does the institutional quality of immigrants' origin countries matter?

When people immigrate to the United States from countries with less economic freedom, they do not dampen economic freedom in their destination states. We use the Economic Freedom of North America report to rate the economic freedom of US states, and we group immigrants by how far below the United States their origin countries score in the Economic Freedom of the World report. Our major findings hold true even when states receive immigrants from countries with far less economic freedom. Most relationships between immigration and the US states' economic freedom scores are neither statistically nor economically significant.     

经济环境、环境规制类型与省域节能减排技术创新——基于异质性科研主体的实证分析

采用模糊集定性比较分析法（fsQCA），以经济集聚、区域开放、研发主体构成、命令型环境规制、市场型环境规制为前因条件，评估2011-2018年中国内地（除西藏外）30个省市的节能减排技术创新情况。结果显示，省域节能减排技术创新绩效是由前因因素组合决定的，引致高绩效的路径不唯一；经济集聚、区域开放是产生高绩效的重要条件。省域节能减排技术创新绩效与研发主体构成密切相关，在公共研究机构占主导的省域，命令型规制的作用显著；在企业占主导的省域，命令型规制的效果取决于经济环境，而市场型规制总体上不利于节能减排技术创新。该研究结果有助于丰富节能减排技术创新理论，同时，为不同经济环境下的政策制定提供决策依据。     

Risk Sharing and Institutional Quality: Evidence from OECD and Emerging Economies

In this paper, we investigate the impact of institutional quality on risk sharing across Organisation for Economic Co-operation and Development (OECD) and emerging economies (EMEs). It has been found that the quality of institutions and risk sharing are significantly interrelated among OECD members (mostly through credit market channel), but not for the EMEs. Our results are consistent when we control for pre- and post-GFC periods. The reason why the impact of institutional quality on risk sharing is limited among EMEs might be due to the significant monetary injections from advanced economies in the form of remittances and financial aid which might understate other factors that influence risk sharing.     

THE INVERSE DOMINO EFFECT: ARE ECONOMIC REFORMS CONTAGIOUS?*

This article examines whether a country's economic reforms are affected by reforms adopted by other countries. Our theoretical model predicts that reforms are more likely when factors of production are internationally mobile and reforms are pursued in other economies. Using the change in the Index of Economic Freedom as the measure of market‐liberalizing reforms and panel data (144 countries, 1995–2006), we test our model. We find evidence of the spillover of reforms. Moreover, consistent with our model, international trade is not a vehicle for the diffusion of economic reforms; rather the most important mechanism is geographical or cultural proximity.     

Index of economic freedom: Unrealized pedagogical opportunities

Although the Index of Economic Freedom appears in many economic textbooks, their coverage of the index misses opportunities to teach statistical and policy-related concepts important for the principles course. The standard textbook presentation passes up an opportunity to examine the statistical issues of weighting in composite index numbers and correlation versus causation. In addition, textbook presentations fail to examine the assumptions made in the indexes about key economic concepts. These include inflation rate targets, appropriate government spending levels, tax rates, labor standards, financial regulation, monetary policy, property rights, government regulation, and even the meaning of economic freedom. This study explores how examining economic freedom index assumptions can help students understand key economic policy debates.     

双元视角下市场导向平衡效应对高科技中小企业新产品绩效的影响

以往研究采用直接二分法探讨两类市场导向对企业绩效存在不同程度的影响。基于双元理论视角,首先,梳理市场导向研究演进脉络,界定市场导向平衡效应的含义,并从资源分配和创新风险角度阐述市场导向平衡效应对企业的影响;其次,构建市场导向影响企业新产品绩效的理论模型,实证考察先驱型市场导向和反应型市场导向平衡效应影响中小型高科技企业新产品绩效的内部机制。通过分析212家中小型高科技企业有效样本,得出以下结论：市场导向平衡效应对企业双元创新具有显著正向影响;双元创新对企业新产品绩效具有显著正向影响;双元创新在市场导向平衡效应与新产品绩效关系中起完全中介作用。     

The transition of corruption institutions and dynamics

The paper analyzes the strong but complex relation between corruption and development. The corruption/honesty index is explained by three variables measuring aspects of development: Income, Polity and Fraser (for Economic Freedom). The last two indices represent the political and the economic system. Two problems arise: (i) Development is a common factor in all four variables, giving the variables strong confluence, so it is difficult to sort out the contribution of each explanatory variable. However, kernel regressions on the corruption/income scatter give a well-defined long-run transition path, which permits an identification of the specific contributions of institutions to corruption. (ii) The correlation of corruption to the first difference of the three development variables is negative. This gives a substantial lag in the corruption/income relation in the form of wide J-curves, but the main direction of causality is still from development to corruption. High income and modern institutions cause low corruption after some time. The corruption/development-relation is a fuzzy but strong long-run connection.     

Social Control of Corporate Power: Comment

Economic activity takes place within an institutional framework. The economy, like society, represents a complex of institutions, ranging from the smallest, such as the family, to the largest and most comprehensive, the state (Chavance 2009). Institutional economics offers a broad perspective that brings forward the concept of gender, since gender is a fundamental organizing principle of institutions (Jacobsen 2003). A focus on social provisioning, typical for both feminist as well as institutional economists, leads to a broader understanding of economic activity. This broader approach includes activities like caring and care labor that cannot be entirely understood in terms of individual choices. In this paper, I explore the relationships between care and the economy from the perspective of neoclassical, institutional, and feminist economic theory. Economic theories are a basis for public policies that have a major impact on people’s lives. I argue that changing the dominating economic perspective into feminist-institutional one would improve the situation of care providers, who would, in turn, contribute to the development of society and the economy.     

Economic freedom and growth. Which policies matter the most?

Empirical studies provide evidence that economic freedom, as measured by the Economic Freedom of the World Index, is related to economic growth. None the less, identifying which aspects of economic freedom are more conducive to growth has proven difficult, due to multicollinearity among the index areas. A possible explanation is that certain countries score high in all areas, whereas others tend do bad in all of them, simply because the former are more freedom-friendly than the latter. However, it is also true that each country presents a combination of freedoms, and restrictions to freedom, at the level of the individual indicators that make up each area. If some regularity exists with respect to these combinations, empirical detection of the most popular policy combinations would alleviate the collinearity problem, when assessing growth effects. Our article explores this possibility by means of cluster analysis, which we conduct at the individual indicator level. We show that multicollinearity can indeed be reduced in this way and identify policy packages that seem to be more conducive to economic growth than others. Results further indicate that certain policy packages may have only a short-term effect on growth, whereas others seem to have an enduring one.     

Economic growth, international trade and air pollution: A decomposition analysis

This study analyzes the impact of economic growth and international trade on the level of air pollution. This is done by the estimation of the Structural Equation Model with two factors describing the structure of economic activity and air pollution intensity. It is further assumed that there is causal link between these two factors and that they are influenced by per capita income, international trade intensity and the Freedom House Index.The estimation results suggest that in the developing countries analyzed both international trade and per capita income lead to changes in the structure of economic activity and - as a consequence - to the increase in air pollution. In addition, the estimation results suggest that the impact of economic growth on air pollution intensity varies between the developing and developed countries. In the developing countries, this impact occurs through the change of the structure of economic activity, while in the developed countries, this impact is mainly direct and occurs through the sum of the scale effect and income effect. The positive sign of this impact suggests the dominance of the scale effect over the income effect.