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Economic Institutions and Growth Nexus: The Role of Governance and Democratic Institutions—Evidence from Time Varying Parameters’ (TVPs) Models

Author

Listed:
  • Ghulam Murtaza

    (PhD Research Scholar, Pakistan Institute of Development Economics, Islamabad)

  • Muhammad Zahir Faridi

    (Director, School of Economics, Bahauddin Zakariya University, Multan, Pakistan)

Abstract

The present study has investigated the channels through which the linkage between economic institutions and growth is gauged, by addressing the main hypothesis of the study that whether quality of governance and democratic institutions set a stage for economic institutions to promote the long-term growth process in Pakistan. To test the hypothesis empirically, our study models the dynamic relationship between growth and economic institutions in a time varying framework in order to capture institutional developments and structural changes occurred in the economy of Pakistan over the years. Study articulates that, along with some customary specifics, the quality of government and democracy are the substantial factors that affect institutional quality and ultimately cause to promote growth in Pakistan.

Suggested Citation

  • Ghulam Murtaza & Muhammad Zahir Faridi, 2016. "Economic Institutions and Growth Nexus: The Role of Governance and Democratic Institutions—Evidence from Time Varying Parameters’ (TVPs) Models," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 675-688.
    • Handle: RePEc:pid:journl:v:55:y:2016:i:4:p:675-688
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic Institutions; Growth; Governance and Democracy; Rolling Window Two-stage Least Squares; Pakistan;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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