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Quality of institutions and standard of living: a panel cointegration analysis

Author

Listed:
  • Roberto Antonietti

    (University of Padova, "Marco Fanno" Department of Economics and Management)

  • Chiara Burlina

    (Gran Sasso Science Institute (GSSI))

Abstract

Does the quality of its institutions affect the average standard of living in a country? We aim to answer this question by conducting a panel cointegration analysis on a sample of 162 countries and 21 years, from 1996 to 2016. In the long run, the estimates show a mutual (Granger) causal effect between all six constitutive elements of institutional quality considered and GDP per capita, our proxy of a country's standard of living. In the short run, however, GDP per capita is only influenced by voice and accountability, and regulatory quality.

Suggested Citation

  • Roberto Antonietti & Chiara Burlina, 2021. "Quality of institutions and standard of living: a panel cointegration analysis," Economics Bulletin, AccessEcon, vol. 41(3), pages 2074-2079.
    • Handle: RePEc:ebl:ecbull:eb-21-00549
    as

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    References listed on IDEAS

    as
    1. Dani Rodrik, 2006. "Institutions for High-Quality Growth: What They Are and How to Acquire Them," Chapters, in: Kartik Roy & Jörn Sideras (ed.), Institutions, Globalisation and Empowerment, chapter 2, Edward Elgar Publishing.
    2. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    3. Andr�s Rodr�guez-Pose, 2013. "Do Institutions Matter for Regional Development?," Regional Studies, Taylor & Francis Journals, vol. 47(7), pages 1034-1047, July.
    4. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth," Introductory Chapters, in: One Economics, Many Recipes: Globalization, Institutions, and Economic Growth, Princeton University Press.
    5. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    6. Corradini, Carlo, 2021. "Local institutional quality and economic growth: A panel-VAR analysis of Italian NUTS-3 regions," Economics Letters, Elsevier, vol. 198(C).
    7. Joakim Westerlund, 2005. "New Simple Tests for Panel Cointegration," Econometric Reviews, Taylor & Francis Journals, vol. 24(3), pages 297-316.
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    More about this item

    Keywords

    quality of institutions; standard of living; panel cointegration; Granger causality;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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