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On the Impacts of Economic Freedom on International Trade Flows: Asymmetries and Freedom Components

Robert J. Sonora orcid.org/0000-0003-4713-7082 ; School of Business Administration, Fort Lewis College

Abstract

This paper employs a gravity equation to estimate the effects of economic freedom on U.S. consumer exports
and imports for 131 countries over the years 2000 - 2005. Using the newly updated Fraser Institute's Economic
Freedom of the World Index, we find that increased economic freedom in the rest of the world would increase
the United States' overall trade volume. We also consider whether imports and exports are affected
asymmetrically with respect to income, transaction costs, and economic freedom. We find considerable
differences in how these variables affect imports and exports of consumer goods. Our results also give some
insight into how economic freedom might affect the U.S. trade position.

Keywords

gravity model; trade flows; trade balance

Hrčak ID:

137164

URI

https://hrcak.srce.hr/137164

Publication date:

24.6.2008.

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