Economic policy and the level of self-perceived well-being: An international comparison

The focus of macroeconomic inquiry has traditionally been on studying economic growth. The success or failure of any government initiated expenditure, revenue, or regulatory policy is commonly judged by the rate of the ensuing economic growth. This study focuses on whether economic variables that figure prominently in current policy discussions, such as economic growth and economic freedom, are related to the self-reported levels of well-being of individuals. The econometric analysis attempts to uncover those economic factors that appear to be the most highly correlated with a country's success or failure in promoting its citizens’ well-being. The cross-country sample includes 68 countries of diverse characteristics and uses averaged data for the 1990s.     

DIFFICULTIES WITH TESTING FOR CAUSATION*

This paper examines the use of econometric tests for causality that are based on the work of Granger and Sims. The main conclusion is that it is not possible to infer the direction of causation from observed correlations. There are two reasons why the causality tests cannot reveal the direction of causation from observed correlations. First, the null hypothesis tested is necessary but not sufficient to imply causality. Second, any specification error renders the causality test results uninterpretable.     

Central bank independence, economic freedom, and inflation rates

Measures of central bank independence combine many attributes that may or may not affect inflation. Central bank attributes are chosen as a result of political calculations over the distribution of resources between competing interest groups. Simultaneity bias results from regressions of central bank independence or of economic and political freedom on inflation or growth. Our estimates demonstrate the connections between economic and political freedom and central bank attributes that lead to inflation. Countries showing high degrees of economic freedom adopt structures that lead to lower inflation; those that show high degrees of political freedom do not adopt inflation-reducing institutional structures.     

Post-employment covenants in the United States: Legal framework and market behaviours

In response to fundamental market changes that are giving labour a much more central role in product market competition, employers often seek to extend their control over human capital beyond termination of the employment relationship. Although empirical studies are scarce, the use of restrictive post‐employment covenants is indeed believed to be widespread. But to what extent can employers lawfully restrict the freedom of their former employees? The author examines the criteria that courts in the United States have considered in balancing employers' legitimate economic interests against labour market efficiency and workers' post‐employment freedom and mobility.     

Economic Freedom and Economic Growth in South East Europe

Economic freedom, understood as absence of barriers for business entry, business operations and business exit, is a source of economic development. Its impact is indirect: through institutions framework creation and environment that encourages economic development. Primarily, economic freedoms are a reflection of institutional arrangement, which makes business operations and the realization of business ideas easier for entrepreneurs and managers, who are two extremely important groups for economic development. The aim of the paper is to present empirical analysis of interrelation between economic freedom and economic development, expressed through several indicators, such as gross domestic product, income per capita, foreign direct investment per capita.     

Freedom of choice in a social context: comparing game forms

In this paper, the set of outcomes of game forms is introduced as the relevant attribute for evaluating freedom of choice. These sets are defined as the cartesian product of every individual’s set of available options. It is argued that doing so is one way of taking into account social interactions when evaluating individual freedom. A set of axioms is introduced, each of which conveys some intuitions about how interactions affect freedom of choice, axioms by the mean of which two criteria, the Max and the MaxMin, are characterised for comparing game forms in terms of the freedom of choice they offer. These criteria are based, respectively, on the comparison of the best and the worst outcome the individual can reach in the game form.     

Perceived Freedom and its Sociological Effects: An Inquiry into the Relationship Between Liberalism and Inequality

Abstract:  Individual freedom has been regarded as one of the most important criteria for a desirable society and life. Recently, the theories of liberalism and distributive justice have received increasing attention as a theoretical basis for tackling problems pertaining to socioeconomic inequality and poverty. However, few quantitative analyses focus on the meaning of freedom in the context of socioeconomic inequality and political order in an existing liberal-democratic society. In this paper, I construct a self-rated measure of freedom—the overall perceived freedom scale—and examine (1) whether socioeconomic inequality is related to inequality of freedom, (2) whether freedom is related to subjective well-being, and (3) whether freedom affects people's political attitude toward inequalities. Analyses using data from a 2005 Japanese national survey ( N  = 1320) reveal the following results: (1) people with higher personal income (not household income), higher education, and better health tend to perceive greater freedom, (2) people with higher perceived freedom are more likely to be satisfied with their life, and (3) individuals with higher perceived freedom are more likely to oppose the government's egalitarian policy, and their opposition is based on the liberal principle of freedom and self-responsibility. On the basis of these findings, the double-edged possibility of individual freedom and liberalism as an "enhancer" and "moderator" of socioeconomic inequalities and political conflicts is suggested.     

A CRITICAL ASSESSMENT OF MEASURES OF CENTRAL BANK INDEPENDENCE

The methodology of measuring central bank independence suggested by Bade and Parkin three decades ago and inverse correlations between the measures and inflation have been widely accepted. The measurement literature has made important contributions identifying elements of institutional design that establish the relationship between the central bank and the government and the measurements from an ordinal perspective provide some useful insights about the major institutional redesigns of central banks during the past several decades. At the same time, the measurement literature is problematic. First, a dummy variable bifurcating central banks into groups of independent and less independent central banks can duplicate the standard correlations suggesting the information content of the specific measures is limited; second, the correlations between inflation and measures of independence are not as stable as claimed; and most important, the measurements are subject to classification problems that have not been fully appreciated. Review of the institutional design and history of the Bank of Korea, Bank of Japan, and the Federal Reserve provide evidence the classification problems are important. The measures of independence are more appropriately regarded as ordinal rankings of central bank independence rather than considered cardinal measures suitable for econometric modeling. (JEL E50, E58, E65)     

INSTITUTIONS, INVESTMENT, AND GROWTH: NEW CROSS-COUNTRY AND PANEL DATA EVIDENCE

This paper outlines the alternative channels through which institutions affect growth, and studies the empirical relationship between institutions, investment, and growth. The empirical results indicate that (i) free-market institutions have a positive effect on growth; (ii) economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment; (iii) political and civil liberties may stimulate investment; (iv) an important interaction exists between freedom and human capital investment; (v) Milton Friedman's conjectures on the relation between political and economic freedom are correct; (vi) promoting economic freedom is an effective policy toward facilitating growth and other types of freedom. ( JEL O17, O40, P51)     

REGIONAL DIFFERENCES IN INSURANCE-INDUCED UNEMPLOYMENT IN CANADA

This paper provides empirical estimates of the effects of selected aspects of the unemployment insurance scheme on unemployment rates in the five economic regions of Canada. Separate five equation econometric models are estimated for each region, using annual time series data for the period 1953–1972. The results indicate that the unemployment insurance scheme had a substantial effect on unemployment rates, and that this effect varied considerably among regions.     

Who feels constrained by high debt burdens? Subjective vs. objective measures of household debt

I analyze differences in debt perception of households confronted with an objective debt burden. Using data from the German Socio-Economic Panel, my econometric analysis shows that a subjective debt burden is not only influenced by the current constellation of income, debt service and, possibly, the potential subsistence level. Expectations of the personal economic situation and several non-financial factors affect debt perception as well. Women report significantly higher subjective debt burdens. Unemployment is also associated with drastically higher self-assessed debt burdens even when controlling for the current financial situation and for expectations. Some differences in the subjective perception of objective debt burdens can be attributed to personality traits (such as locus of control) and life satisfaction. I draw the following conclusions: First, self-assessed debt burdens contain information beyond the current economic situation, e.g., expectations of future incomes. Second, relying on subjective debt statements can lead to biased results for policy analysis if the researcher does not account for non-financial factors.     

Are Political Freedoms Converging?

This article tests for convergence of freedom using Freedom House's (2002) indices of political rights and civil liberties in 136 countries from 1972 to 2001. Time-series tests, using structural breaks, are employed to test for stochastic and β-convergence. Cross-section tests are performed to examine the impact of legal systems, education, natural resources, economic freedom, and other variables. We find that political freedoms are converging for one-half of the countries. Additionally, we find that the level of freedom is significantly related to the legal system, education, economic freedom, and natural resources. (JEL O57 , O40 , C3 )     

The Impact of Economic Freedom and Personal Freedom on Net In-Migration in the U.S.: A State-Level Empirical Analysis, 2000 to 2010

Arguably, private enterprise flourishes under conditions of increased freedom. However, increases in economic freedom can sometimes impose costs on others (negative externalities and monopoly power being prominent examples). Nevertheless, on balance, it is typically expected that the greater the degree of economic freedom, the more successfully and efficiently markets perform and the greater the prosperity created through private enterprise. These net outcomes from greater freedom accelerate economic growth and development, which in turn creates opportunities for yet further success. From a different perspective, it can be argued that greater personal freedom promotes higher levels of utility for consumers in non-economic ways. Accordingly, the present study empirically investigates whether the prospects of greater economic freedom and/or greater personal freedom in any given state vis-à-vis other states act(s) to induce a greater net influx of migrants. This empirical study of internal U.S. migration over the study period from 2000 to 2010 finds clear evidence that migrants prefer to move to those states with greater economic freedom on the one hand and greater personal freedom on the other hand.     

QUANTIFYING THE LIFE CYCLE OF SCHOLARLY ARTICLES ACROSS FIELDS OF ECONOMIC RESEARCH

Does the life cycle of economic papers differ across fields of economic research? By constructing and analyzing a large dataset that combines information on 9,672 articles published in the top five economic journals from 1970 to 2000 with detailed yearly citation data obtained from Google Scholar, we find that published articles do have a life cycle that differs across fields of economic research (which we divide into the categories of applied, applied theory, econometric methods, and theory). Applied and applied theory papers are the clear winners in terms of citation counts. For the first years after their publication, they receive higher numbers of citations per year than papers in other fields of research do. They also reach a higher peak number of citations per year and apparently sustain those peak levels for longer, in addition to being cited over longer periods of time (i.e., they have a longer lifespan). Citation patterns are much less favorable for theoretical papers, which are the object of fewer citations per annum in the first years following publication, have lower peak numbers and a shorter lifespan. Econometric method papers are a special case; the pattern for most of these papers is similar to the pattern for theory papers, but the most successful papers (as measured by the number of citations) on econometric methods are also the most successful papers in the entire discipline of economics. (JEL A14)     

What does economic freedom buy?

The debate regarding “positive” versus “negative” freedom is discussed in terms of past theoretical and empirical studies. This is followed by an analysis of the impact of “negative” freedom, using a recently developed index of economic freedom for each of the 50 U.S. states allowing for an analysis of otherwise quite homogenous political entities, an advantage not realizable in previous international comparisons. Using several indicators of social well-being, the analysis suggests that the minimalist government aspects of negative freedom are often perversely related to other conditions of well-being, across states, and by implication among nations. Further, it is argued that such an adverse relationship may well flow from the behavior patterns embodied in and encouraged by a single-minded focus on negative freedom.     

Beyond liberal vs liberating: women’s economic empowerment in the United Nations’ Women,Peace and Security agenda

This article is about women’s economic empowerment within the United Nations (UN) Women, Peace and Security (WPS) agenda. Based on analysis of the core agenda-setting documents, it traces where two different versions of women’s economic empowerment, “liberal” (including women in the formal economy) and “liberating” (women collectively mobilizing to challenge the status quo), appear in the WPS agenda. It argues that the two exist in uneasy tension in the UN’s aspirations for women’s economic security post-war, but that when it comes to actual activities and achievements, the liberal version dominates over the liberating version. The article argues that it is important not to overstate the divide between the two approaches, and that the seeds of a liberating approach can be found within the liberal. It is initiatives to facilitate women’s economic empowerment that contain opportunities for collective action to transform the structures of the economy that WPS advocates should advocate. This would strengthen the WPS agenda and its ability to contribute to security as feminists envisage it, as encompassing freedom from want as well as freedom from fear.     

Tax rates and economic growth in the OECD countries

This article proposes refined econometric estimates of effective marginal income tax rates for 23 OECD countries from 1951 to 1990. Panel regressions find such measures negatively correlated with economic growth. These results are consistent with endogenous growth theories and opposite to those of most empirical literature, which relies on measures of effective average tax rates. The negative correlation is also robust to consideration of other growth determinants.     

Whatever Will Happen to Industrial Sociology

Industrial sociology faces a renaissance if the leaves of social change can be read correctly. The permissive freedom of the 1960s and 1970s is being curtailed by some harsh economic realities. Parents and students alike are seeking the economic promise of job guarantees when the students graduate. Liberal arts education is on the defensive. Such training must demonstrate it has vocational opportunity or can be converted to such opportunity by postgraduate training. Sociologists who have had the freedom to do their own thing for 20 to 30 years are being forced to make some agonizing appraisals. The entire field of sociology has been placed under scrutiny. The drastic cuts in research funding are only one index of the governmental depreciation of sociology and most other social sciences. The loss of sociology majors and enrollments is another index of student and parental lack of confidence in sociology as a good investment. Academic sociologists who have placed applied sociology in a second-rate category are beginning to recognize that research training of graduate students must turn to applied training or jobs will not be available for many, if not most, of their graduate students. In a similar manner, research funding and graduate fellowships will not be available unless this change is made.     

Who bears the burden of bribery? Evidence from public service delivery in Kenya

This article empirically examines how an individual's economic, social and political capital affects their propensity to make bribe payments in exchange for public services. Using an individual‐level survey on bribes, the econometric results suggest that the burden of bribery is borne by the poor, but substantially decreases when institutions that constrain bureaucratic corruption are strong and effective. The results also show that the incidence of bribery decreases when social capital is high but increases when political networks are prevalent. These findings support the need to combine anti‐corruption reforms with poverty reduction strategies and social policies in order to foster equity in public services provision in Kenya.     

Freedom ossified: Political culture and the public use of history in Jamaica 1

The basic thesis of this paper addresses three distinct, yet related, historical developments. Firstly, the democratic promise of freedom for Caribbean people was not fulfilled, as the planter class was not prepared to renounce its power. Secondly, when it was no longer able to hold on to its power, political responsibilities were given to the middle classes, which celebrated this transition as a major achievement. However, the actual arrangements that were made still kept the majority of the people from meaningful participation in the political process and from access to economic resources. Nevertheless, the middle classes introduced the celebratory notion of freedom, although freedom continued to be denied to the majority. Thirdly, in the current period of globalization and neoliberal economics, this ethos has now attained a quasi‐mythical status in many Anglophone Caribbean countries and, at the very same time, the notion of freedom has been emptied of its practical meaning and has in many instances become counter‐productive. In short, Caribbean freedom has become ossified.