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Machado Daniel,Fuinhas José Alberto 한국국제경제학회 2023 International Economic Journal Vol.37 No.2
This empirical research addressed the short – and long-run relationship between economic freedom (and its subcomponents) and income inequality using a panel of 102 countries between 2000 and 2018. The results of employing an autoregressive distributed lag model showed that economic freedom has a detrimental impact on income inequality measured by any of the main inequality indicators. However, the results point to a relatively inelastic relationship. Additionally, the study explored the interactions between the subcomponents of economic freedom and income inequality, again pointing to a rigid relationship. While the size of the government and legal property rights increase income inequality, deregulation exerts the opposite effect. This paper closes with future guidelines for research.