Economics and management of national economy

Economic freedom and anti-inflation policy

Economic Annals-XXI

Economic Annals-ХХI: Volume 145, Issue 9-10(2), Pages: 11-14

Citation information:
Boyko, V. (2014). Economic freedom and anti-inflation policy. Economic Annals-XXI, 9-10(2), 11-14. https://ea21journal.world/index.php/ea-v145-03/

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Vira Boyko
Researcher,
Lviv Commercial Academy
10 Tuhan-Baranovsky Str., Lviv, 79005, Ukraine
vera-boyko-99@mail.ru

Economic freedom and anti-inflation policy

Abstract. In this paper, the anti-inflationary properties of the Index of Economic Freedom individual components from the Heritage Foundation have been analyzed. The contribution of this paper is twofold. Firstly, within the data of 24 transformation economies, it is fetched out that such factors as foreign trade liberalization, protection of property rights, lower corruption, freedom of financial, business and investment activities (to less extent) contribute to a decrease in inflation, and the opposite effect is exerted by fiscal freedom and lower government spending. Also, it is found that labor market regulations are neutral in respect to inflation. Secondly, it is established that dynamic of changes in economic freedom have an expansionary effect on output measured by the gross domestic product, while there is no relationship between GDP growth and the level of economic freedom. For Ukraine, it is argued that liberalization of financial, business and investment activities is of crucial importance in order to conduct anti-inflationary policies.

Keywords: Inflation; Economic Freedom; Transformational Economy

JEL Classification: E24; E29; H50; H64; F42

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Received 26.08.2014

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