The nexus between economic freedom and growth: Evidence from CEE countries in transition

This study sought to examine the causal links between economic freedom and economic growth of new EU members in transition in the period 2000-2009. The empirical results suggest significant causality running from monetary and fiscal freedom, trade openness, regulation of credit, labour, and business, legal structure and security of property rights, and access to sound money to growth, especially in less and moderately developed CEE transition countries. Moreover, we found evidence that economic freedom was one of the factors stimulating the convergence of these economies towards rich EU members. The evidence of causality in the opposite direction was much weaker.