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The Causal Relationship between Institutions and Economic Growth: An Empirical Investigation for Pakistan Economy

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  • Siddiqui, Danish Ahmed
  • Ahmed, Qazi Masood

Abstract

This paper investigates relationship between institutional quality and economic performance in Pakistan using the Johansen-Juselius cointegration technique and the Granger causality test. The study results indicate that Institutions and growth are cointegrated and thus exhibit a reliable long run relationship. The Granger causality test findings indicate that the causality between Institutions and growth is uni-directional. However, there is no short run causality from Institutions to growth and vice versa. Therefore, as a policy implication that institutional quality may cause to the sustainable increase in country’s income in the long run, and success of any policy could be influenced by the soundness of institutions.

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  • Siddiqui, Danish Ahmed & Ahmed, Qazi Masood, 2009. "The Causal Relationship between Institutions and Economic Growth: An Empirical Investigation for Pakistan Economy," MPRA Paper 19745, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19745
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    Cited by:

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    2. Adnan Haider & Musleh ud Din & Ejaz Ghani, 2011. "Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(4), pages 773-807.
    3. Ademola Obafemi Young, 2019. "Growth Impacts of Income Inequality: Empirical Evidence From Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 226-262, December.
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    5. Munir, Sidra & Rao, Zia-ur-Rehman & Sana, S, 2019. "Financial Development, Fiscal Policy and Economic Growth: The Role of Institutional Quality in Pakistan," Journal of Finance and Accounting Research, University of Management and Technology, Lahore, vol. 1(2), pages 27-47, August.
    6. Ademola Obafemi Young, 2024. "Intensive and Extensive Margins of Export Diversification as Strategies for Sustainable Economic Growth: Evidence from the Nigerian Economy," Foreign Trade Review, , vol. 59(2), pages 187-224, May.
    7. Md. Qamruzzaman & Jianguo Wei, 2019. "Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation," IJFS, MDPI, vol. 7(4), pages 1-27, October.
    8. Young Ademola Obafemi, 2022. "Specialization Versus Diversification as Alternative Strategies for Sustainable Growth in Resource-Rich Developing Countries. Case of Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(3), pages 1-47, September.
    9. Degbedji, Dado Fabrice & Akpa, Armand Fréjuis & Chabossou, Augustin Foster & Osabohien, Romanus, 2024. "Institutional quality and green economic growth in West African economic and monetary union," Innovation and Green Development, Elsevier, vol. 3(1).

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    More about this item

    Keywords

    institutions; social capital; growth; cointegration; index; granger; error correction; Johansen; pakistan;
    All these keywords.

    JEL classification:

    • Z1 - Other Special Topics - - Cultural Economics
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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