Difference between revisions of "Fraser International"

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= Instructions on pulling data from Fraser International =
 
= Instructions on pulling data from Fraser International =
 
 
  
 
<u>'''Updating Fraser International Economic Freedom data, differences between Normal and Chain Linked'''</u>
 
<u>'''Updating Fraser International Economic Freedom data, differences between Normal and Chain Linked'''</u>
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#&nbsp;'''<u>Chain Linked Method&nbsp;</u>'''This method makes the data more comparable over time. E.g. If a country's rank in 1 sector goes down in 1 year, in comparison to the previous year, the method, looks to see if there has been a tradeoff, i.e. has the rank in any other sector correspondingly gone up in comparison to the previous year. This helps in determining a truer rating for the economic freedom. The documentation states that the chain link index was always intended to be the ideal predictor of economic freedom. Note, however that data in relation to the chain link index isn't currently available for 35 countries.
 
#&nbsp;'''<u>Chain Linked Method&nbsp;</u>'''This method makes the data more comparable over time. E.g. If a country's rank in 1 sector goes down in 1 year, in comparison to the previous year, the method, looks to see if there has been a tradeoff, i.e. has the rank in any other sector correspondingly gone up in comparison to the previous year. This helps in determining a truer rating for the economic freedom. The documentation states that the chain link index was always intended to be the ideal predictor of economic freedom. Note, however that data in relation to the chain link index isn't currently available for 35 countries.
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The two graphs below explain the differences in the two approaches
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[[File:|480x289px]]
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&nbsp;The above graph describes the changes in Rwandan Economy with regards, to economic freedom. Notice how the chain linked calculation is far smoother. This is because, in case of unadjusted data, an uneven rise in 1 sector, pushes up the curve, completely ignoring the tradeoffs, which is highly unrealistic. From 1990-1995, both lines move similarly, since the Rwandan war pushes ratings down in all sectors.
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[[File:|481x289px]]
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The same applies for this chart for China. The Unadjusted is far more sensitive because of the ignorance of tradeoffs.

Revision as of 07:16, 15 June 2016

What is Fraser International? What is economic freedom? Where do they get the data or how is it collected? How often do they publish?

Series pulled into IFs

Series Name Category Definition Source Last IFs Update Coverage Used in preprocessor
FreedomEcon Government Economic freedom on scale of 1 to 10 (most free) Fraser International 2016/02/16 1970, 1975, 1980, 1985, 1990, 1995, 2000-2010 SocioPol
FreedomEconChainLinked Government Economic freedom on scale of 1 to 10 (most free)
Fraser International 2016/02/16 1970, 1975, 1980, 1985, 1990, 1995, 2000-2010
No

Instructions on pulling data from Fraser International

Updating Fraser International Economic Freedom data, differences between Normal and Chain Linked

This section explains the different methods used, when computing the Economic Freedom Index by the Fraser Institute. Two sets of data are available in relation to Economic Freedom, an unadjusted one and a chain linked one. Currently Ifs uses the unadjusted data.

Description of Economic Freedom Index- The index is compiled on the basis of the rank the country obtains in 5 sectors, namely, size of the government, Legal system and property rights, sound money, Freedom of international trade and Regulation. The rank that the country obtains in these five sectors determine its economic freedom rating. Now this rating is determined in two ways, an unadjusted calculation and a chain linked calculation.

Name of Series

  1. Normal (Unadjusted)- SeriesFreedomEcon
  2. Chain linked- SeriesFreedomEconChainLinked

 

Source of the data- http://www.freetheworld.com/

 

Method of Calculation-

  1. Unadjusted method in this method, the rating is determined for each year without regard to other years. So, this to a certain extent compromises comparability and ignores tradeoffs.  For Example, a country could have an extremely high rank in 1 sector, and this would trump ranks in all other sectors, thus pushing up the country's rating. It is important to note however, that the data for this rating is more complete, i.e. it is available for all of the 157 countries.

 

  1.  Chain Linked Method This method makes the data more comparable over time. E.g. If a country's rank in 1 sector goes down in 1 year, in comparison to the previous year, the method, looks to see if there has been a tradeoff, i.e. has the rank in any other sector correspondingly gone up in comparison to the previous year. This helps in determining a truer rating for the economic freedom. The documentation states that the chain link index was always intended to be the ideal predictor of economic freedom. Note, however that data in relation to the chain link index isn't currently available for 35 countries.


 

The two graphs below explain the differences in the two approaches

 

[[File:|480x289px]]

 

 The above graph describes the changes in Rwandan Economy with regards, to economic freedom. Notice how the chain linked calculation is far smoother. This is because, in case of unadjusted data, an uneven rise in 1 sector, pushes up the curve, completely ignoring the tradeoffs, which is highly unrealistic. From 1990-1995, both lines move similarly, since the Rwandan war pushes ratings down in all sectors.

 

[[File:|481x289px]]

 

The same applies for this chart for China. The Unadjusted is far more sensitive because of the ignorance of tradeoffs.