Does The Economy Of Freedom Effect Macroeconomic Performance In A Broken Economy? Empirical Evidence

The aim of this study is to provide evidence on whether the liberal economy has a significant impact on selected groups of countries (the 10 Freest Countries and the Fragile Five Countries). The study investigates the macroeconomic impact of economic freedom on price stability based on the consumer price index and Gross Domestic Product per capita. According to the results of the analysis using Panel data analysis for the years 2005-2020, the findings reveal that economic freedoms positively affect economic growth but do not have the expected effect on price stability. These results confirm the Monetarist theory that "Inflation is always and everywhere a monetary phenomenon" and reveal the necessity of combating inflation with tight monetary and fiscal policies rather than regulations that expand economic freedoms. This suggests that policymakers should prioritize price stability in achieving the ultimate goal of economic growth and price stability and that economic growth can be achieved with economic freedoms after price stability is achieved. In the literature, there is no research on whether the macroeconomic performance of countries with fragile economies will be positively affected by economic freedom. This study contributes to literature in this respect.