Economic freedom index, investor sentiment & market behavior
Ο δείκτης οικονομικής ελευθερίας, το συναίσθημα του επενδυτή και η συμπεριφορά των αγορών
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Keywords
Economic Freedom Index ; Investor sentiment ; Market behavior ; Heritage foundation ; Institutional quality ; Eurozone GDP per capita ; 2014-2024 periodAbstract
Introduction: This study explores the relationship between economic freedom, investor sentiment, and economic performance across the Eurozone from 2014 to 2024. It leverages the Economic Freedom Index (Heritage Foundation) and behavioral finance tools to assess how institutional quality and market perceptions influence GDP per capita (PPP).
Data Collection & Methods: Data were collected for 19 Eurozone countries, including 13 indicators from the Economic Freedom Index and GDP per capita (PPP) from the World Bank. Panel data regressions were conducted using EViews, with GDP per capita as the dependent variable.
Results: GDP per capita increased significantly in most countries, with Ireland (+149%), Cyprus (+103%), and Croatia (+114%) leading. Strong positive correlations were found between GDP per capita and indicators such as Property Rights (ρ = 0.71), Government Integrity (ρ = 0.68), and Judicial Effectiveness (ρ = 0.61).
Conclusions: Institutional quality, particularly in property rights, integrity, and judicial effectiveness, plays a critical role in economic prosperity. Countries with strong governance and open markets demonstrated greater resilience and growth, especially during post-COVID recovery and digital transitions.