1999 Index of Economic Freedom in WSJ

» BJohnson - Release of new book.

For those of you who are interested, I have a opinion piece in today's (12/1/98) Wall Street Journal on page A22. It is on the release of my new book, the 1999 Index of Economic Freedom . Parts of the book will be available later today at The Heritage Foundation website and at The Wall Street Journal website.

-- posted by BJohnson

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» MattB_5 - Wall Street Journal Piece

I read your article in today's Wall Street Journal regarding the Economic Freedom Index and currency strength. It implied that countries which scored the highest on the index had the lowest drop in currency.

Now, here's my problem with your analysis: your categories(free, mostly free, etc.) are not of comparable sizes. For example, the number of countries that fall in the mostly free category is several times as large as the number of countries in the free category, which itself seems to be too small to make an accurate analysis. In my opinion, this is not the best way to conduct a study.

-- posted by MattB_5

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» BJohnson - Economic Freedom and Currency Devaluation

Matt:

Thanks for your post and for stopping by my page.

The analysis in question uses accepted statistical methods to achieve these results. The countries were broken into quartiles based on how well they scored on our Index. With specific reference to the analysis of currency devaluation, a much smaller dataset was used. Since the focus has been on the Asian financial crisis, we chose to focus on this area exclusively. The point being, countries swept up by the Asian financial crisis had a better chance of sustaining the value of their currencies, the more economically free they are. Here is the text from our book descibing this section:

"Chart 1.2 shows the decline in exchange rate values and the 1999 Index scores for Hong Kong, Singapore, Taiwan, South Korea, Malaysia, Thailand, the Philippines, Indonesia, Vietnam, and Laos. As shown in Chart 1.2, currency devaluations have tended to be more drastic in countries with lower levels of economic freedom. Relative to other economies in the region, countries with higher levels of economic freedom, such as Hong Kong, have tended to have currencies that have weathered the economic typhoon of the previous 19 months better than those of countries with more restricted economies."

Hope this helps.

-- posted by BJohnson

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