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Governance and growth: A panel VAR approach

Author

Listed:
  • Guilherme Amorim

    (University of Illinois at Urbana-Champaign)

  • Marcelo E. A. Silva

    (Universidade Federal de Pernambuco)

Abstract

In this paper, we explore the dynamic relationship between economic growth and quality of governance across a wide sample of countries. Using a panel vector autoregression (VAR) approach, we show that shocks to governance quality exert a positive and significant impact on economic growth, one that is sustained for more than ten years after the initial shock. Therefore, our results support the institutional view of economic growth, with better governance fostering higher growth. We also present evidence supporting the idea that higher growth leads to better institutions.

Suggested Citation

  • Guilherme Amorim & Marcelo E. A. Silva, 2023. "Governance and growth: A panel VAR approach," Economics Bulletin, AccessEcon, vol. 43(4), pages 1896-1907.
    • Handle: RePEc:ebl:ecbull:eb-23-00205
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Governance; Institutions; Growth; Cross-Country; Panel VAR.;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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