December, 2015

Sub-national Indices of Economic Freedom

  • Dean Stansel

    Research Associate Professor, O'Neil Center for Global Markets and Freedom, Southern Methodist University
  • Jamie Bologna Pavlik

    Assistant Professor of Agricultural and Applied Economics, Texas Tech University
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The literature on economic freedom has primarily focused on nations, where differences are largest. However, though the differences in economic freedom within individual nations are smaller, there are numerous advantages of examining issues at the sub-national level. In this chapter we discuss these sub-national indices of economic freedom and issues related to their use by empirical researchers. For example, there are much smaller differences in culture and other institutions that are difficult to quantify and thereby include in an econometric model. In addition, the geographic boundaries are at least somewhat less arbitrary, particularly at the metropolitan area level. We argue that the existence of the sub-national indices of economic freedom provide great opportunities for future research on important issues regarding the relationship between governmental institutions and a variety of economic outcomes.