Institutions and economic development: A Granger causality analysis of panel data evidence
This study examines the causal relationship between institutions and economic development using a panel Granger causality test. The study incorporates two institutional datasets, the International Country Risk Guide (ICRG) and World Governance Indicators (WGI). The empirical results based on 60 countries show that there is a bi-directional causality between institutions and economic development. The findings also suggest that causality patterns between institutions and economic performance vary at different stages of income level. Better institutional quality fosters economic development in higher income countries, whereas economic development tends to enhance institutional quality in lower income countries.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 37 (2013)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: |
Phone: +49-(0)941-943 54 10
Fax: +49-(0)941-943 54 27
Web page: http://www.elsevier.com/locate/inca/621171
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Keefer, Philip & Knack, Stephen, 1997. "Why Don't Poor Countries Catch Up? A Cross-National Test of Institutional Explanation," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 590-602, July.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2001.
"The Colonial Origins of Comparative Development: An Empirical Investigation,"
American Economic Review,
American Economic Association, vol. 91(5), pages 1369-1401, December.
- Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
- William Easterly, 2002. "The cartel of good intentions: The problem of bureaucracy in foreign aid," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(4), pages 223-250.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2008.
"Governance matters VII : aggregate and individual governance indicators 1996-2007,"
Policy Research Working Paper Series
4654, The World Bank.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2009. "Governance matters VIII : aggregate and individual governance indicators 1996-2008," Policy Research Working Paper Series 4978, The World Bank.
- John W. Dawson, 2001.
"Causality in the Freedom-Growth Relationship,"
01-04, Department of Economics, Appalachian State University.
- Justesen, Mogens K., 2008. "The effect of economic freedom on growth revisited: New evidence on causality from a panel of countries 1970-1999," European Journal of Political Economy, Elsevier, vol. 24(3), pages 642-660, September.
- Kyle Peyton & Ariel R. Belasen, 2012. "Corruption in Emerging and Developing Economies: Evidence from a Pooled Cross-Section," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 48(2), pages 29-43, March.
- Andreas Dietrich, 2009.
"Does Growth Cause Structural Change, or Is it the Other Way Round? A Dynamic Panel Data Analyses for Seven OECD Countries,"
Jena Economic Research Papers
2009-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Andreas Dietrich, 2012. "Does growth cause structural change, or is it the other way around? A dynamic panel data analysis for seven OECD countries," Empirical Economics, Springer, vol. 43(3), pages 915-944, December.
- Mancur Olson, 1996. "Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 3-24, Spring.
- William Easterly & Ross Levine, 2002.
"Tropics, Germs, and Crops: How Endowments Influence Economic Development,"
15, Center for Global Development.
- Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
- William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," NBER Working Papers 9106, National Bureau of Economic Research, Inc.
- Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2004.
"Do Institutions Cause Growth?,"
NBER Working Papers
10568, National Bureau of Economic Research, Inc.
- Manuel Vega-Gordillo & JosÃ© L. Ãlvarez-Arce, 2003. "Economic Growth and Freedom: A Causality Study," Cato Journal, Cato Journal, Cato Institute, vol. 23(2), pages 199-215, Fall.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002.
"Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development,"
NBER Working Papers
9305, National Bureau of Economic Research, Inc.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, 06.
- Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
- James L. Butkiewicz & Halit Yanikkaya, 2004.
"Institutional Quality and Economic Growth: Maintenance of the Rule of Law or Democratic Institutions, or Both?,"
04-03, University of Delaware, Department of Economics.
- Butkiewicz, James L. & Yanikkaya, Halit, 2006. "Institutional quality and economic growth: Maintenance of the rule of law or democratic institutions, or both?," Economic Modelling, Elsevier, vol. 23(4), pages 648-661, July.
- Raiser, Martin, 2001. "Institutions, Social Norms and Economic Development: Platteau, J.-P. (Ed.), Harwood Academic Publishers, Amsterdam, 2000, 361 pp," Economic Systems, Elsevier, vol. 25(4), pages 405-408, December.
- Pierre-Guillaume Méon & Laurent Weill, 2005.
"Does better governance foster efficiency? An aggregate frontier analysis,"
ULB Institutional Repository
2013/8368, ULB -- Universite Libre de Bruxelles.
- Pierre-Guillaume Méon & Laurent Weill, 2004. "Does better governance foster efficiency? An aggregate frontier analysis," Economics of Governance, Springer, vol. 6(1), pages 75-90, January.
- Gagliardi, Francesca, 2008. "Institutions and economic change: A critical survey of the new institutional approaches and empirical evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 416-443, February.
- Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
- Geert Bekaert & Campbell R. Harvey & Christian Lundblad, 2001.
"Does Financial Liberalization Spur Growth?,"
NBER Working Papers
8245, National Bureau of Economic Research, Inc.
- Laura Langbein & Stephen Knack, 2010. "The Worldwide Governance Indicators: Six, One, or None?," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 350-370.
- repec:tpr:qjecon:v:114:y:1999:i:1:p:83-116 is not listed on IDEAS
- Granger, Clive W. J., 2003. "Some aspects of causal relationships," Journal of Econometrics, Elsevier, vol. 112(1), pages 69-71, January.
- Christophe Hurlin & Elena Dumitrescu, 2012.
"Testing for Granger Non-causality in Heterogeneous Panels,"
- Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
- Robert Hoffmann & Lee Chew Ging & Bala Ramasamy & Matthew Yeung, 2004.
"FDI and Pollution: A Granger Causality Test using Panel Data,"
CEABuR Working Papers
2, Centre for Europe-Asia Business Research.
- Robert Hoffmann & Chew-Ging Lee & Bala Ramasamy & Matthew Yeung, 2005. "FDI and pollution: a granger causality test using panel data," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(3), pages 311-317.
- Huynh, Kim P. & Jacho-Chávez, David T., 2009. "Growth and governance: A nonparametric analysis," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 121-143, March.
- Venet, Baptiste & Hurlin, Christophe, 2001. "Granger Causality Tests in Panel Data Models with Fixed Coefficients," Economics Papers from University Paris Dauphine 123456789/6159, Paris Dauphine University.
- Grogan, Louise & Moers, Luc, 2001. "Growth empirics with institutional measures for transition countries," Economic Systems, Elsevier, vol. 25(4), pages 323-344, December.
- Haggard, Stephan & Tiede, Lydia, 2011. "The Rule of Law and Economic Growth: Where are We?," World Development, Elsevier, vol. 39(5), pages 673-685, May.
- Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.
- Fahim Al-Marhubi, 2004. "The Determinants of Governance: A Cross-Country Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 394-406, 07.
- Marcella Nicolini & Alessia Paccagnini, 2011. "Does Trade Foster Institutions? An Empirical Assessment," Review of Economics and Institutions, Università di Perugia, vol. 2(2).
- A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, 03.
- José Aixalá & Gema Fabro, 2007. "A Model Of Growth Augmented With Institutions," Economic Affairs, Wiley Blackwell, vol. 27(3), pages 71-74, 09.
- Lee, Keun & Kim, Byung-Yeon, 2009. "Both Institutions and Policies Matter but Differently for Different Income Groups of Countries: Determinants of Long-Run Economic Growth Revisited," World Development, Elsevier, vol. 37(3), pages 533-549, March.
- Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988.
"Estimating Vector Autoregressions with Panel Data,"
Econometric Society, vol. 56(6), pages 1371-95, November.
- Tom Doan, . "RATS program to demonstrate IV estimation of VAR in panel data," Statistical Software Components RTZ00185, Boston College Department of Economics.
- José Aixalá & Gema Fabro, 2008. "Does The Impact Of Institutional Quality On Economic Growth Depend On Initial Income Level?," Economic Affairs, Wiley Blackwell, vol. 28(3), pages 45-49, 09.
- Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
- Efendic, Adnan & Pugh, Geoff & Adnett, Nick, 2011. "Institutions and economic performance: A meta-regression analysis," European Journal of Political Economy, Elsevier, vol. 27(3), pages 586-599, September.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Pääkkönen, Jenni, 2010. "Economic freedom as driver of growth in transition," Economic Systems, Elsevier, vol. 34(4), pages 469-479, December.
- Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
- Evelyne Huber & Dietrich Rueschemeyer & John D. Stephens, 1993. "The Impact of Economic Development on Democracy," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 71-86, Summer.
- Robert E. Hall & Charles I. Jones, 1999.
"Why Do Some Countries Produce So Much More Output per Worker than Others?,"
NBER Working Papers
6564, National Bureau of Economic Research, Inc.
- repec:tpr:qjecon:v:110:y:1995:i:3:p:681-712 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:eee:ecosys:v:37:y:2013:i:4:p:610-624. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.