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Examining the Hayek–Friedman hypothesis on economic and political freedom

Authors
Journal
Journal of Economic Behavior & Organization
0167-2681
Publisher
Elsevier
Publication Date
Volume
74
Issue
3
Identifiers
DOI: 10.1016/j.jebo.2010.03.006
Keywords
  • Economic Freedom
  • Political Freedom
  • Hayek
  • Milton Friedman
Disciplines
  • Economics
  • Political Science

Abstract

Abstract This paper examines empirically the hypothesis made famous by Nobel Laureates Friedrich A. Hayek and Milton Friedman that societies with high levels of political freedom must also have high levels of economic freedom. In our judgment, the Hayek–Friedman hypothesis holds up fairly well to historical scrutiny. Using data on economic and political freedom for a sample of up to 123 nations back as far as 1970, we find relatively few instances of societies combining relatively high political freedom without relatively high levels of economic freedom. In addition, we find that these cases are diminishing over time. Finally, we examine several cases of countries on different economic and political freedom journeys.

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