Local institutional quality and economic growth: A panel-VAR analysis of Italian NUTS-3 regions

Carlo Corradini

Economics Letters, 2021, vol. 198, issue C

Abstract: We explore the relationship between institutional quality and economic growth across a panel of Italian NUTS-3 regions. Estimates from panel vector autoregressions provide robust evidence in support of a causal effect of institutional quality on growth. This is found to be particularly important in areas characterised by lower levels of economic development. Conversely, no evidence is found of reverse dynamics of economic growth on institutional quality. The results cast doubts on the view that policies focusing on economic growth per se may lead to a strong institutional context, suggesting intervention aimed at improving formal institutions to be a pre-requisite for sustained regional development.

Keywords: Institutions; GDP growth; Regional development; Panel VAR; NUTS3 regions (search for similar items in EconPapers)
JEL-codes: O11 O18 O43 R11 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:198:y:2021:i:c:s0165176520304195

DOI: 10.1016/j.econlet.2020.109659

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