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Institute of Public Finance

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Economic freedom and income inequality: further evidence from 58 countries in the long-run

Nicholas Apergis, University of Piraeus, Department of Banking and Financial Management, Piraeus, Greece

This study employs panel data for 58 countries from 1980-2010, to investigate the dynamic relationship between economic freedom and income inequality. Both linear and non-linear (Panel Smooth Threshold Regression) cointegration estimation methods are used to identify a long-run equilibrium relationship between the overall economic freedom index and its components, and income inequality. The linear long-run parameter estimates for the entire panel of countries show that the association is negative, while the non-linear long-run parameter estimates indicate that above a threshold point the association between economic freedom and income inequality is negative, while below this threshold point the association is positive.

Keywords:  economic freedom; Economic Freedom Index; income distribution

Year:  2015   |   Volume:  39   |   Issue:  4   |   Pages:  349 - 370   

Full text (PDF)   |   DOI: 10.3326/fintp.39.4.1   |   E-mail this article   |   Download to citation manager
 December, 2015
IV / 2015
EBSCO Publishing
ISSN 1846-887X
e-ISSN 1845-9757
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