Non-linearity and the threshold effect of transparency on economic growth: evidence from developing countries

Siong Hook Law, Sylviana Maya Damayanti, Ali Kutan and Irwan Trinugroho

Journal of Economic Policy Reform, 2022, vol. 25, issue 4, 388-414

Abstract: This study examines the linear and non-linear threshold impacts of transparency on economic growth in 70 developing countries from 1984 through 2018, utilizing panel generalized method of moments (GMM) and dynamic-panel threshold estimations. We find that the impact of transparency on growth is stronger when we use non-linear GMM, and dynamic-panel threshold estimations. There is a U-shaped relationship between transparency and economic growth, while transparency is found to stimulate economic growth, especially in a high-transparency threshold regime. The result reveals that financial development plays an important role in moderating the transparency–economic growth nexus in developing countries.

Date: 2022
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DOI: 10.1080/17487870.2022.2136175

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