The asymmetric evolution of economic institutions: evidence from dynamic panel quantile regression with IV and fixed effects

Michel Candido de Souza, Mauro Sayar Ferreira and Lízia de Figueiredo

Applied Economics Letters, 2023, vol. 30, issue 11, 1531-1539

Abstract: Conditional mean regressions show that economic institutions (insteco) correlate positively to regime durability, the quality of political institutions, human capital and GDP per capita. However, using dynamic panel quantile regressions with fixed effects and instrumental variables, we detect that insteco evolves asymmetrically. Adverse shocks worsen insteco of countries with better political institutions and more durable regimes, while positive innovations cause insteco of countries with better political institutions and longer political regime to improve even further. Among advanced economies, negative shocks cause a stronger effort to ameliorate insteco the higher the human capital and GDP per capita. Our exercises include 129countries.

Date: 2023
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DOI: 10.1080/13504851.2022.2069668

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