bureaucratic minimal squawk behavior theory and evidence from regulatory agencies this paper develops a model in which a desire to avoid criticism prompts otherwise public spirited bureaucrats to behave inefficiently decisions are taken to keep interest groups quiet and to keep mistakes out of the public eye the policy implications of this minimal squawk behavior are at odds with the view that agencies should be structured to minimize the threat of capture an empirical test using data from us state public utility commissions rejects the capture hypothesis and is consistent with the squawk hypothesis longer puc terms of office are associated with a higher incidence of rate reviews and lower household electricity bills jel d73 l51 l97 l98

political liberty and social development an empirical investigation liberty is not only economic it is political whether the economic system promotes social development is one question whether the political system promotes social development is another question the empirical investigations indicate that for the world political liberty has a small though significant relationship with the level of social development

the two freedoms economic growth and development an empirical study log linear methods are applied to categorical data containing economic freedom political freedom the level of income and the rate of economic growth for a panel of about 100 countries from 1975 to 1992 the main results are given economic freedom the rate of economic growth is independent of political freedom and the level of income given the level of income political freedom is independent of economic freedom and the growth rate the analysis suggests the fundamental effects of economic freedom in fostering economic growth and a high level of income as the condition of a high degree of political freedom

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

experts and quacks what happens when type is endogenous in a reputational setting here customers cannot tell experts from imitative quacks but gain information through repeated interaction firm incentives to invest in expertise vary nonmonotonically in how tolerant customers are of bad outcomes more tolerant customers are both more forgiving making expertise less necessary and longer tenured increasing the value of retaining them in equilibrium the proportion of expert firms is bounded away from one some quacks are necessary to keep incentives of experts in line the fraction of experts is decreasing in customers switching costs and the relative cost of expertise over quackery

money new keynesian macroeconomics and the business cycle abstract we show in this paper that the typical modern business cycle cannot be reduced to the real business cycles archetype a monopolistic competition model with price adjustment costs affected by technological and monetary shocks better mimics the economic fluctuations in two countries with very different cyclical properties namely france and the united states in our model monetary shocks are necessary to reproduce the standard deviation of output the money output correlation the labour productivity worked hours relative standard deviation the labour productivity worked hours correlation and the mark up output correlation with two independent shocks one real more specifically defined than the solow residual and one nominal the model gives an answer to some empirical puzzles which were left unexplained by traditional rbc models

the expenditure switching effect welfare and monetary policy in a small open economy abstract this paper analyses the implications of the expenditure switching effect for the role of the exchange rate in monetary policy in a small open economy it is shown that when the elasticity of substitution between home and foreign goods is not equal to unity welfare depends on the variances of producer prices and the terms of trade producer price targeting is compared to consumer price targeting and a fixed exchange rate it is found that a fixed exchange rate yields higher welfare than the other regimes only when the elasticity of substitution between home and foreign goods is very high

risk the financial market and macroeconomic equilibrium growing recognition of the importance of stock market phenomena to the real economy underscores the need for models linking exogenous uncertainty asset market performance and the rest of the economy in an optimizing framework without certainty equivalence this paper constructs a three agent model with continuous time stochastic variables uncertain private production and government expenditure and forward looking rational agents the growth rate of output physical capital accumulation financial asset returns and uncertain inflation are determined as functions of the exogenous uncertainty in the economy analysis of the model finds that increased risk associated with government policy often reverses in an explainable way the conventional comparative static predictions of nonstochastic macro models

uncertainty and monetary policy in a wage bargaining model in a wage bargaining model increased uncertainty concerning monetary and real aggregates is shown to give rise to a higher equilibrium unemployment rate moreover the equilibrium unemployment rate is found to depend on the choice of monetary policy regime as this choice affects the uncertainty wage setters face when setting the nominal wage rate it is also shown that the equilibrium inflation rate may depend on uncertainty in such a way that increased uncertainty gives rise to a higher equilibrium unemployment rate as well as a higher equilibrium inflation rate or what has been called stagflation

new evidence on the relationship between democracy and economic growth it is often maintained that democracy is a luxury which comes at a price in terms of subsequent slower increases in national living standards however various recent cross section studies on economic growth have found evidence that lack of civil and political liberties is negatively correlated with economic growth using a new measure of democracy which is based upon the number of years that a country can be regarded as a democracy the robustness of this relationship is examined both direct and indirect effects of lack of democratic liberties are analysed our main conclusion is that the relationship between democracy and economic growth is not rubust

credible commitments and investment does opportunistic ability or incentive matter the more likely it is that the sovereign will alter property rights for his or her own benefit the lower the expected returns from investment and the lower in turn the incentive to invest north and weingast 1989 p 803 i introduction since at least hobbes social scientists have identified external agents as necessary for sustaining efficient outcomes in political economies 1 when such agents are absent efficient collective order is arguably impossible because individuals cannot by themselves coordinate actions to address common dilemmas external agents are thought to resolve this impossibility by credibly threatening to inflict punishments where members of a closed system have no incentive to punish themselves social scientists frequently characterize external agents as supplying incentive aligning services in return for a share of associated efficiency gains this remuneration scheme however provides agents with an incentive to not only create efficiency gains but to opportunistically manipulate the sharing of those gains moreover unless an agent can credibly commit against acting on this incentive potential subjects to its authority have reduced motivation to enter the game hence although external agents can make efficiency enhancing actions incentive compatible i e align individual incentives with group objectives credible commitments against opportunism are necessary for egoistic individuals to subject themselves to an agent s authority i evaluate the potential for two types of institutions to facilitate such commitments the first produces checks on the ability for political agents to act opportunistically to see how such an institution might work suppose that a polity formally diffuses authority among say an executive and legislature given this separation of powers political agents must act collectively to opportunistically expropriate their constituents product if the cost for a nonsingleton set of agents to act exceeds that for an individual then polities that diffuse authority e g establish veto players increase the cost for political agents to play opportunistic actions this increase in turn facilitates credible commitments against opportunism and encourages productive economic activity 2 the second type of institution shapes the planning horizons of external agents so that even egoistic agents have an incentive to build reputations as nonopportunistic types for example political agents who can complete only the term they are serving have relatively little incentive ceteris paribus to build or maintain reputations as nonopportunistic types besley and case 1995 formalize this conjecture to argue that with asymmetric information about politicians types or some imperfect information about the state of the world the reelection mechanism can raise effort or otherwise induce less opportunistic behavior besley and case 1995 p 769 emphasis added 3 interpreted in this light formal restrictions on planning horizons e g binding term limits diminish the capacity for political agents to credibly commit against opportunism and in turn the incentive for economic actors to engage in productive activity to evaluate the empirical relevance of these hypotheses i examine the association between investment and institutions that check the ability or incentive for political agents to play opportunistic actions 4 egoistic individuals allocate resources to investment if they can recognize a sufficient return hence not only are property rights over an investment s product important so is the stability of those rights stability in turn can be stronger when institutions increase the cost of political opportunism if i forgoing benefits from reputation building and ii expending resources to coordinate opportunistic actions are costs of opportunistically altering property rights then investment should exhibit a positive association with institutions that increase such costs

the conduct of monetary policy and the natural rate of unemployment note the potential of monetary policy to affect the natural rate of unemployment is demonstrated for a disaggregated macroeconomic model in which it takes time for labor markets to eliminate excess supplies resulting from stochastic shocks the effect of aggregate output variability on the natural rate of unemployment is derived for the system in its stochastic steady state and illustrative calculations show the possible effects of varying the monetary policy rule copyright 1989 by ohio state university press

further evidence on the relationship between economic freedom and economic growth often it is maintained that economic freedom may further high levels of economic growth using various measures of economic freedom constructed by scully and slottje the robustness of this relationship is examined both direct and indirect effects of lack of liberties are analysed our main conclusion is that the link between economic freedom and economic growth depends upon the measure used for some indicators of economic freedom there appears a robust direct relationship while for others there is no such relationship investment is not related to our indicators for economic freedom

a cross country analysis of electricity market reforms potential contribution of new institutional economics abstract the paper explores whether the question of why some countries are able to implement more extensive reforms is closely related to the question of why some countries have better institutions than others we analyze this question by using an empirical econometric model based on poisson regression with cross section data covering 51 states in the us 13 provinces in canada and 51 other countries in the course of the study we check the validity of three important arguments of new institutional economics nie for the power market liberalization process the first argument is the path dependency to test its impact on the reform progress we try to explain whether the background of the chairperson of the regulatory agency when reforms started or that of the governor minister responsible for energy policy at that time has an impact on the subsequent reform progress the second argument is the impact of democracy as an institution on the reform progress we look at the effect of two important indicators of democracy i e civil liberties and political rights on the reform progress the final argument of nie is about transaction costs we concentrate on the level of corruption in a country as one of the key factors that determine transaction costs and try to explore its impact on the reforms the results show that the backgrounds of the chairperson and the minister governor the level of democracy and corruption in a country are significantly correlated with how far reforms have gone in that country the negative relationship between reform progress and civil liberties may indicate that reforms may be limited in democratic countries with strong civil society institutions such as trade unions or other organized structures in the society that may consider reforms as harmful to their self interest

market oriented institutions and policies and economic growth a critical survey this paper surveys recent evidence suggesting that market oriented institutions and policies are strongly related to economic growth focusing on studies using the economic freedom ef indicator of the fraser institute this index is critically discussed also various serious shortcomings of empirical studies using this index are identified nevertheless there are strong indications that liberalization i e an increase in the ef index stimulates economic growth this paper also reviews studies on the determinants of ef political liberalization is often found to enhance economic liberalization whereas there is less evidence for causality running in the other direction

nominal rigidity and monetary uncertainty abstract a stochastic macromodel with dynamically optimising wage setting households is used to examine the effect on current macroeconomic variables of an anticipated increase in variability of the money stock there is a nominal rigidity in the form of a money wage set one period in advance in whose absence monetary uncertainty has no effect on current variables we show that for plausible parameterisations monetary uncertainty combined with nominal rigidity raises the nominal interest rate depressing aggregate demand and hence current price and output it also causes the wage to be set higher increasing the natural rate of unemployment

inflation variability real wage variability and production inefficiency in recent years economists have paid considerable attention to the relation between the rate of inflation and its temporal variance the consensus emerging from this discussion is that there exists a strong positive relation between the inflation rate and its temporal variance see for example okun 1971 gordon 1971 jaffe and kleiman 1977 and foster 1978 clearly the increased variability of the inflation rate is likely to involve social costs that concern inefficiency in consumption and in production thus in his nobel lecture friedman 1977 says the growing volatility of inflation and the growing departure of relative prices from the values that market forces alone shall set combine to render the econoniic system less efficient p 470 in general the interpretation given to production inefficiency resulting from increased variability in the inflation rate is that of a reduction in output to a level lower than that occurring under price stability for example levi and makin interpret friedman s inefficiency argument thus from the two components of friedman s argument we have that high inflation accompanied by high variability of inflation will mean a lower output levi and makin 1980 p 1023 it is our purpose in this paper to elaborate on the concept of the production inefficiency caused by increased inflation variability iv where we focus on the variability in the real wage caused by inflation variability we suggest a concept of inefficiency of production that relates average changes in the use of labour to average changes in output specifically it is shown that iv alters output and or labour employment in a way that is inferior to the relation between output and employment under stable prices that we suggest is the crux of production inefficiency resulting from iv this production inefficiency will emerge as a result of iv independently of whether output rises or falls as a result of iv indeed our analysis will illustrate that mean output may increase or decrease so that by using output alone as an index of efficiency we may obtain the unlikely result that iv raises production efficiency one result we derive en route is that under plausible assumptions about the production function labour employment may on average rise with iv notwithstanding this we show that efficiency in production declines this result may be used as an interpretation of the inefficiency concept as used by friedman thus friedman says these developments clearly lower economic efficiency it is less clear what their effect is on recorded unemployment 1977 p 466 we proceed by considering the basic model and showing the ambiguity of the effect of inflation variability on mean output in section i in section ii we show that iv introduces a production inefficiency defined upon the

can corruption foster regulatory compliance the legal and economic literatures overwhelmingly support the notion that regulatory compliance is always less in the presence of corruption this paper departs from those literatures and shows that whenever public officials are paid fixed wages an increase in corruption may actually foster compliance the conditions that make this possible are laid down in a theoretical model empirical evidence that corroborates the theoretical findings is provided using firm level data for 26 transition economies

rights equity and economic efficiency the adelman morris premise that economic development and equity are incompatible is not supported by the evidence of a strong relationship between equality of rights and the income distribution the premise that equity requires the denial of individual rights and the affirmation of state control is an oxymoron what has been overlooked in the literature on growth and equity is the effect of the rights structure on both economic efficiency and on the income distribution the evidence is that free societies have much larger shares of income going to the middle 60 percent of the distribution than is observed in societies where men are not free to choose in politically open societies compared to politically closed regimes the share of income to the middle three quintiles is q2 10 7 vs 8 0 q3 16 0 vs 11 5 and q4 22 9 vs 17 9 in the aggregate the shares to the middle quintiles are 49 6 vs 37 4 in nations that obey the rule of law compared to regimes in which the rights of the state relative to the individual are paramount the comparisons are q2 11 2 vs 7 4 q3 16 3 vs 10 6 q4 23 0 vs 17 3 summing the three quintiles yields a comparison of 50 5 vs 35 3 in countries that have private property market allocation of resources and minimum intervention by the state compared to command economies the shares of income to the middle quintiles are q2 10 8 vs 8 0 q3 16 0 vs 11 1 and q4 22 8 vs 17 7 aggregated the shares of the middle class in regimes with high levels of economic liberty are 49 6 vs 36 8 for regimes with restricted private economic rights

economic freedom culture and growth how do economic freedom and culture impact economic growth this paper argues that culture as measured by the world values surveys and economic institutions associated with economic freedom are both independently important for economic prosperity but the strength of their impact can be better understood only when both are included in the growth regression our results indicate that economic freedom is more important than culture for growth outcomes suggesting substitutability between the two we posit that culture is important for growth when economic freedom is absent diminishing in significance once economic freedom is established

learning the ropes general experience task specific experience and the output of police officers abstract we estimate the role that law enforcement officer experience has on the probability of punishment using a unique data set of tickets issued by the idaho state police linked to human resource records all else equal officers issue fewer tickets earlier in their career than later in their career quasi exogenous shocks to an officer s task specific experience generated by law changes cause a temporary reduction in the frequency with which a subset of troopers use those laws creating disparities in the likelihood that individual citizens are cited for law violations the reduction in ticketing in response to a law change is largest for newer troopers and law changes later in a trooper s career have a smaller effect on his use of that law

how does uncertainty about future fiscal policy affect current macroeconomic variables a dynamic stochastic general equilibrium macromodel is constructed based on infinitely lived dynamically optimising households with labour market monopoly power randomness in future government spending causes randomness in the future output and price levels both when the money wage is flexible and when it is set one period in advance we show that through three different mechanisms rational anticipation of this depresses current aggregate demand if the wage is preset it thereby also depresses current output such fiscal uncertainty is suggested as one possible explanation for the faltering of the economic recovery in europe in 1995 and 1996

financial freedom and bank efficiency evidence from the european union this paper investigates the dynamics between the financial freedom counterparts of the economic freedom index drawn from the heritage foundation database and bank efficiency levels we rely on a large sample of commercial banks operating in the 27 european union member states over the 2000s after estimating bank specific efficiency scores using data envelopment analysis dea we develop a truncated regression model combined with bootstrapped confidence intervals to test our main hypotheses results suggest that the higher the degree of an economy s financial freedom the higher the benefits for banks in terms of cost advantages and overall efficiency our results also show that the effects of financial freedom on bank efficiency tend to be more pronounced in countries with freer political systems in which governments formulate and implement sound policies and higher quality governance

monetary randomness and investment abstract this paper develops a neoclassical model in which the behavior of the money supply affects investment by affecting the real distribution of asset returns investment depends on wealthholders demand for capital a stochastic money growth rule influences portfolio choice by affecting the distribution of the inflation rate the variance of inflation matters to wealthholders because of the existence of assets with returns that are not indexed to changes in the price level money and bonds which are contracted in nominal terms in a rational expectations environment asset demands will thus be sensitive to the distribution of the money growth rate our principle conclusion is that an increase in the variance of the money growth rate lowers investment which complements tobin s 1965 result that an increase in the mean stimulates capital accumulation the paper also represents a step toward incorporating an asset market into a macroeconomic model in a manner which takes account of lucas 1976 criticism of econometric policy evaluation all variables in the model including asset return distributions are functions of technology preferences and the money supply rule further expectations are rational

monetary uncertainty in discrete time utility of money models abstract in a discrete time model higher variability of the future money supply affects current macroeconomic variables when beginning of period money is the argument of utility but not when end of period money is the effect is through the existence of a precautionary money demand

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

sticky goods prices flexible asset prices monopolistic competition and monetary policy a monetary general equilibrium asset pricing model with sticky goods prices is developed goods prices are set by monopolistically competitive firms that maximize stock market value equilibria with underutilization of resources excess capacity in some states result in contrast to previous monetary asset pricing models the degree of competition affects capacity utilization monetary policy can affect output and resource utilization in addition to real asset prices depending upon the amount of information available to the monetary authority

law enforcement and wrongful arrests with endogenously in competent officers economic intuition suggests that enforcement errors incentivize crimes therefore officers must be penalized for committing such errors legal scholars argue that if penalties for errors are severe officers may become timid while policing thereby encouraging crime we evaluate these arguments in a model where officers invest in competence competence increases the officer s ability to identify criminals low sanctions for errors encourages bold policing by officers but may still raise the equilibrium level of crime because it also discourages investments in competence granting immunity to only competent officers qualified immunity reduces both errors and crimes when competence is observable

monetary growth innovations in a simple cash in advance asset pricing model abstract this paper contributes to the existing literature in the rational expectations cash in advance asset pricing general equilibrium model in two directions first we show that by allowing a variable velocity of circulation an increase in the conditional variance of the money growth process triggers an increase in the demand for money relative to stocks and bonds with a consequent reduction in stock and bond prices which is the opposite of the current result in the literature with constant unitary velocity second we explicitly show how the sequential markets and specific timing of information fits exactly into the notion of irreversibility in the sense that when faced with uncertainty agents might find optimal to delay decisions in order to wait for the arrival of new information

money and interest in a cash in advance economy the authors analyze an aggregative general equilibrium model in which the use of money is motivated by a cash in advance constraint applied to purchases of a subset of consumption goods the system is subject to both real and monetary shocks which are economy wide and observed by all they develop methods for verifying the existence of characterizing and explicitly calculating equilibria copyright 1987 by the econometric society

how robust is the relationship between economic freedom and economic growth using various indicators for economic freedom it is shown that increases in economic freedom are robustly related to economic growth this conclusion holds even if the impact of outlying observations is taken into account the level of economic freedom is not related to growth

freedom and growth do constitutions matter this paper uses an augmented solow model with cross section data to measure the effect on per capita income of a the entrenchment of various rights in a country s constitution and b the level of economic freedom in a country broadly construed the results suggest that entrenchment per se of any single right seldom has a significant general economic effect while the effect of economic freedom is significant and substantial the paper then considers whether such evidence could support the proposition that constitutions do not matter while it concludes otherwise it does caution against incurring excessive negotiation costs to obtain entrenchment of a comprehensive wish list of rights

economic freedom and equality friends or foes how does economic freedom mainly how property rights are designed and protected relate to income equality whilst this is argued to be theoretically ambiguous the empirical results reveal that there is a positive relationship between changes in economic freedom and equality the more a country increased its economic freedom between 1975 and 1985 the higher the level of equality around 1985 most important in this regard is trade liberalization and financial deregulation also there are signs that the level of economic freedom in 1985 is negatively related to the level of equality around that year plausibly because of less redistribution

incomplete pass through and the welfare effects of exchange rate variability abstract this paper considers the implications of incomplete exchange rate pass through for optimal monetary and exchange rate policy a two country model is presented which allows an explicit derivation of welfare functions in terms of a weighted sum of the second moments of producer prices and the nominal exchange rate from a single country perspective the optimal exchange rate variance depends on the degree of pass through the size and openness of the economy the elasticity of labour supply and the volatility of foreign producer prices welfare may be decreasing or increasing in the volatility of the exchange rate

corruption and optimal law enforcement abstract we analyze corruption in law enforcement the payment of bribes to enforcement agents threats to frame innocent individuals in order to extort money from them and the actual framing of innocent individuals bribery extortion and framing reduce deterrence and are thus worth discouraging optimal penalties for bribery and framing are maximal but surprisingly extortion should not be sanctioned the state may also combat corruption by paying rewards to enforcement agents for reporting violations such rewards can partially or completely mitigate the problem of bribery but they encourage framing the optimal reward may be relatively low to discourage extortion and framing or relatively high to discourage bribery

nominal rigidity and monetary uncertainty in a small open economy temporary nominal rigidity is introduced into a dynamic stochastic general equilibrium model of a small open economy the foreign country is also modelled and is the closed economy counterpart of the domestic country we examine whether a small open economy is more vulnerable than a closed economy to uncertainty over its monetary policy a signal of an increase in future variability which was not previously foreseen as a risk by agents is shown to weaken the current exchange rate and boost current output in the small open economy in the equivalent closed economy it has no effect on current variables

interest rates and monetary policy uncertainty abstract this paper analyzes a model in which optimizing households are uncertain about monetary policy and learn about it over time in this model the variance of changes in nominal and ex post real interest rates increases with the variance of the household s predictive distribution over money growth a positive relation between unexpected changes in nominal interest rates and the money stock results from monetary policy uncertainty finally if money growth covaries negatively with real wealth an increase in monetary policy uncertainty increases the expected real rate of interest and decreases the nominal rate of interest

economic freedom and taxation is there a trade off in the locational competition between countries this paper investigates the relationshipbetween economic freedomand taxation we argue that an economicallyfree environment improvesthe attractiveness of a location which inturn enables governmentsto levy higher business taxes to test thishypothesis empirically weestimate the impact of economic freedom onthe national tax policy where the latter is measured by thecorporate tax revenue related tognp corporate tax ratio we utilize adata set of 46 developed and lessdeveloped countries between 1980 and 1997and find a clear confirmationof our hypothesis further a simulationanalysis reveals that the observedchange in economic freedom has equalizedthe international distributionof corporate tax ratios

optimising agents staggered wages and persistence in the real effects of money shocks in this paper we incorporate taylor s 1979 staggered wage setting into an optimising dynamic general equilibrium framework to study whether staggered wages could induce a high degree of persistence in the real effects of money shocks we conclude that high persistence is an unlikely outcome sensible values of the microeconomic parameters and or a moderate rate of underlying inflation imply a low degree of persistence furthermore once explicit microfoundations are taken into account we show that i the model is highly non linear ii the inertia of the system is inversely related to the level of average inflation

staggered wages and output dynamics under disinflation we study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages the money wage is fixed for two periods and is chosen according to intertemporal optimisation agents have labour market monopoly power we show that the introduction of microfoundations helps to resolve the puzzle raised by directly postulated models namely that disinflation in staggered pricing models causes a boom in our model disinflation whether unanticipated or anticipated unambiguously causes a slump

economic freedom and growth decomposing the effects most studies of the relation between economic freedom andgrowth of gdp have found a positive relation one problem inthis area is the choice of economic freedom measure a singlemeasure does not reflect the complex economic environment anda highly aggregated index makes it difficult to draw policyconclusions in this paper we investigate what specific typesof economic freedom measures that are important for growth the robustness of the results is carefully analysed since thepotential problem with multicollinearity is one of thenegative effects of decomposing an index the results showthat economic freedom does matter for growth this does notmean that increasing economic freedom defined in generalterms is good for economic growth since some of thecategories in the index are insignificant and some of thesignificant variables have negative effects

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society

liberty and development a further empirical perspective this paper uses the wright ratings of economic freedom to investigate the relationship between economic freedom and economic development for most countries in the world this rela tionship is apparently strong and direct for such economic freedoms as freedom of property and freedom of movement but inverse for freedom of association these findings appear to be indepen dent of the type of economic system or civil liberties as measured by the gastil ratings which have their own important effects on economic development