Measuring economic freedom during the Covid-19 pandemic

Abstract

The Covid-19 pandemic in 2020 led to extensive new government regulations and lockdown policies that, according to some prominent definitions, severely reduced economic freedom. However, many of these new pandemic-related regulatory restrictions on economic freedom are largely missed by the Economic Freedom of the World Report (EFW). This paper first adjusts the Our World in Data Covid-19 Stringency Index into a measure of lockdown regulatory freedom and then merges it into the EFW index to better measure countries' 2020 cross-sectional relative economic freedom. We find significant differences in the relative ranking of economic freedom between countries once we adjust for lockdown regulatory restrictions.