Scandinavian Working Papers in Economics
Ratio Working Papers,
The Ratio Institute
No 25: Does free trade really reduce growth? Further testing using the economic freedom index
Niclas Berggren () and Henrik Jordahl
Additional contact information
Niclas Berggren: The Ratio Institute, Postal: P.O. Box 5095, SE-102 42 Stockholm, Sweden
Henrik Jordahl: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Abstract: While studies of the relationship between economic freedom and economic growth have shown it to be positive, significant and robust, it has rightly been argued that different areas of economic freedom may have quite different effects on growth. Along that line, Carlsson and Lundström (2002) present the surprising result that “International exchange: Freedom to trade with foreigners” is detrimental for growth. We find that “Taxes on international trade” seems to drive this result. However, using newer data and a more extensive sensitivity analysis, we find that it is not robust. Least Trimmed Squares-based estimation in fact renders the coefficient positive.
Keywords: free trade; economic freedom; economic growth
JEL-codes: E61; F13; F43; O24; O40; P17
31 pages, June 3, 2003
Full text files
berggren_jordahl.pdf
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