Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 05-8: Political Ideology and Economic Freedom.

Christian Bjørnskov ()
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Christian Bjørnskov: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark

Abstract: This paper examines the association between political ideology and the size of government and quality of the legal system and regulations. A cross-country indicator of government and citizen ideology is presented. Empirical results suggest that ideologically leftwing governments increase the size of government while the long-term ideological convictions of citizens affect the size of government and the quality of the legal system and regulations. These effects depend on the degree of political competition while ideology also affects countries’ institutional response to economic crisis.

Keywords: Political Economy; Institutional Quality; Ideology; Social Norms

JEL-codes: P16; Z13

44 pages, January 1, 2005

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