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JOURNAL OF APPLIED BUSINESS AND ECONOMICS
A Granger Causality Test of the Hayek-Friedman Hypothesis:
Must Political Freedom and Economic Freedom Coexist?
Author(s): Allen L. Webster
Citation: Allen L. Webster, (2012) "A Granger Causality Test of the Hayek-Friedman Hypothesis:
Must Political Freedom and Economic Freedom Coexist?," Journal of Applied Business and Economics, Vol. 13, Iss. 5, pp. 64-75
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Throughout their careers both Frederick von Hayek and Milton Friedman preached the unequaled virtues
of freedom of choice. Their support of free-market economies was persistent throughout their lives. Their
thoughts and positions on this matter had been clearly and consistently made clear. It remains for others
who follow to assess their relative positions and evaluate their contributions to the discussion of the role
of economic capitalism in a political state. This paper offers an empirical examination of the Hayek-
Friedman Hypothesis which argues that societies with high levels of political freedom must also have
high levels of economic freedom. Granger-causality tests are performed to identify directionality between
levels of economic freedom and two separate, distinct measures of political freedom.
