Institutions and Economic Growth: A Systems Approach
AbstractIn a simultaneous equations with error components framework, we analyze the institutions-growth relationship. We address individual heterogeneity in cross-country production functions, and endogeneize factor inputs in order to disentangle the direct and indirect effects of institutions on growth. We find that the effects of political freedom on total factor productivity and human capital are positive and significant, but they are negative and significant on physical capital and labor force growth. Economic freedom, on the other hand, has positive and significant effects on total factor productivity, physical and human capital, and labor force growth. The total effects of both freedoms on growth are positive
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 63.
Date of creation: 11 Aug 2004
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Institutions; Growth; Simultaneous Equations; Error Components;
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-30 (All new papers)
- NEP-DEV-2004-10-30 (Development)
- NEP-REG-2004-10-30 (Regulation)
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