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

Ghulam Murtaza and Muhammad Zahir Faridi
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Ghulam Murtaza: PhD Research Scholar, Pakistan Institute of Development Economics, Islamabad
Muhammad Zahir Faridi: Director, School of Economics, Bahauddin Zakariya University, Multan, Pakistan

The Pakistan Development Review, 2016, vol. 55, issue 4, 675-688

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.

Keywords: Economic Institutions; Growth; Governance and Democracy; Rolling Window Two-stage Least Squares; Pakistan (search for similar items in EconPapers)
JEL-codes: O40 P16 C14 H10 (search for similar items in EconPapers)
Date: 2016
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