Economic freedom and income inequality: Evidence from a panel of global economies- a linear and a non-linear long-run analysis

Nicholas Apergis, Arusha Cooray

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18 Citations (Scopus)

Abstract

This study employs panel data from 138 countries (with unbalanced time frameworks) to investigate the relationship between economic freedom and income inequality. Both linear and non-linear cointegration methodologies are used to identify a long-run equilibrium relationship between: (i) the overall Economic Freedom of the World index and income inequality, and (ii) the major areas of the index and income inequality. The linear long-run parameter estimates document that the association turns out to be negative, while the non-linear long-run parameter estimates illustrate that above a threshold point the association between economic freedom and income inequality is negative, while below this threshold point, the association turns out to be positive. The empirical findings survive a number of robustness tests, such as alternative measures of income inequality.
Original languageEnglish
JournalThe Manchester School
Early online date6 Nov 2015
DOIs
Publication statusE-pub ahead of print - 6 Nov 2015

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