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

Danish Siddiqui and Masood Qazi ()

Issues in Economics and Business, 2019, vol. 5, issue 1, 1-19

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.

Date: 2019
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Working Paper: The Causal Relationship between Institutions and Economic Growth: An Empirical Investigation for Pakistan Economy (2009)
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