Document Type : مقالات پژوهشی

Authors

Urmia University

Abstract

This study investigates the effects of the government effectiveness and financial development indices on economic growth in D-8 countries over the period 1996-2012, by applying the Panel Smooth Transition Regression (PSTR) model. For this purpose, we use Non-Linear Least Squares (NLS) method for estimation of model. The estimation results reject the linearity hypothesis, and estimate two regimes that give a threshold at government effectiveness of 0.192 for the countries under investigation. Moreover, our results demonstrate that the positive impact of government effectiveness and financial development indices on economic growth increases in high levels of calculated threshold for government effectiveness. The results also indicate education expenditure and openness index have a positive impact in both regimes, agricultural raw materials exports variable has a negative impact in first regime and positive impact in the second regime and inflation rate has a negative impact in both regimes on economic growth. Hence, improvement of government effectiveness and financial development and an efficient administrative system as well as efficient financial markets and banks in the D-8 countries lead to an increase in the economic growth and development.

Keywords

Angelopoulos, K., Philippopoulos, A. & Tsionas, E. (2008). Does Public Sector Efficiency matter? Revisiting the Relation between Fiscal Size and Economic Growth in a World Sample. Public Choice, Vol. 137, 245-278.
Asadi, Z., Bahrami, J. & Talebloo, R. (2013). The Effects of Resources Curse Phenomena on Financial Development and Economic Growth: A Dynamic Panel Approach. Journal of Economic Growth and Development Research, 10, 9-26. (In Persian).
Asiama, J. & Mobolaji, H. (2011). Trade and Financial Openness, Institutional Quality, and Financial Development in Sub-Sahara Africa (SSA). International Conference on International Trade and Investment (ICITI).
Bardhan, P., Bowles, S. & gintis, H. (1998). Wealth Inequality, Wealth Constraints and Economic Performance. Microeconomics 9805002, Econ WPA, 1-72.
Colletaz, G., & Hurlin, C. (2006). Threshold Effects of the Public Capital Productivity: An International Panel Smooth Transition Approach. Working Paper, LEO, University of Orleans.
Deidda, L., & Fattouh, B. (2008). Banks, Financial Markets and Growth. Journal of Financial Intermediation, 17, 6-36.
Ehrlich, I. & Lui, F.T. (1999). Bureaucratic corruption and endogenous economic growth. Journal of Political Economy, 107, 270−293.
Evrensel, A. (2010). Corruption, growth, and growth volatility. International Review of Economics and Finance, 19, 501–514.
Fok, D., Van Dijk, D. & Franses, P. (2004). A Multi-level Panel STAR Model for US Manufacturing Sectors. Working Paper, University of Rotterdam.
Friedman, M., & Schwartz, A.J. (1963). A Monetary History Of The United States. Princeton University Press, Princeton.
Gaytan, A., & Ranciere, R. (2004). Wealth, Financial Intermediation and Growth. Available at SSRN: http://ssrn.com/abstract=860925.
Goldsmith, R.W. (1969). Financial Structure and Development. New Haven, U.S., Yale University Press.
Gonzalez, A., Terasvirta, T. & Van Dijk, D. (2005). Panel Smooth Transition Regression Models. SEE/EFI Working Paper Series in Economics and Finance, No. 604.
Greene, W. (2005). Efficiency of Public Spending in Developing Countries: A Stochastic Frontier Approach. Paper by World Bank Staff and Consultants, The World Bank.
Hauner, D., & Kyobe, A. (2008). Determinants of Government Efficiency. IMF Working Paper, Fiscal Affairs Department, WP/08/228.
Heidari, H. & Saeidpour, L. (2013). Air Pollution and Economic Growth Nexus in Middle East Countries: An Application of panel Smooth Transition Regression Model. Quarterly Energy Economics Review, 10, No. 38, 50-78. (In Persian).
Heidari, H., Alinezhad, R. & Jahangirzadeh, J. (2014). An Investigation of Democracy and Economic Growth Nexus: A Case Study for D-8 Countries. Journal of Economic Development and Growth Research, 4, No. 15, 41-60. (In Persian).
Heidari, H. & Alinezhad, R. (2014- In Press). An Investigation of the Impact of Institutional Variable of Rule of Law on Economic Growth in D-8 Countries. Encyclopedia of Economic Rights, 20, No. 5. (In Persian).
Heidari, H., Alinezhad, R., Mohseni Zonouzi, S.J. & Jahangirzadeh, J. (2015). An Investigation of Corruption and Economic Growth Nexus: Some Evidence from D-8 Countries. Journal of Economic Research, 14, No. 55, 157-183. (In Persian).
Heidari, H. & Alinezhad, R. (Forthcoming). Political Stability and Economic Growth Nexus: Some New Evidence from D-8 Countries. Quarterly Journal of Economic Strategy. (In Persian).
Isazadeh, S. & Ahmadzadeh, A. (2009). The Effect of Institutional Factors on Economic Growth with a Focus on Government Institutions (Cross-country Study for The Period 1996-2005). Iranian Journal of Economic Research, 13, No. 40, 1-28. (In Persian).
Jude, E. (2010). Financial development and growth: A Panel Smooth Regression Approach. Journal of Economic Development, 35, 15-33.
Kar, M., Nazlıoğlu, S. & Ağır, H. (2011). Financial Development and Economic Growth Nexus in the MENA Countries: Bootstrap Panel Granger Causality Analysis. Economic Modelling 28, 685-693.
Khan, A. (2001). Financial Development and Economic Growth. Macroeconomics Dynamics, 5, 413–433.
King, R., & Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, 108, 513-542.
Komijani, A. & Salatin, P. (2010). The Effect of Governance Quality on Economic Growth in Iran and Neighoboring Countries (Turkey and Pakistan). Management Journal (Researcher), 7, No. 20, 27-41. (In Persian).
Levine, R. (2005). Finance and Growth: Theory and Evidence. Handbook of Economic Growth, Amsterdam, Netherlands, Elsevier, Chapter 12, 1(1), 865–934.
Levin, A., Lin, C.F. & Chu, C.S.J. (2002). Unit Root Tests in Panel Data: Asymptotic and Finite-sample Properties. Journal of Econometrics, No. 108, 1-24.
Lucas, R.E. (1988). On The Mechanics of Economic development. Journal of Monetary Economics, 22, 3-42.
McKinnon, R.I. (1973). Money and Capital in Economic Development. Brookings Institutions, Washington DC.
Mehrara, M. & Talakesh Nayini, H. (2009). The Relationship between Financial Development and Economic Growth based on Dynamic Panel Data Approach in Selected Countries (1979-2003). Journal of Knowledge and Development, 26, 143-169. (In Persian).
M.Kabir H., Sanchezb, B. & Jung-Suk, Y. (2011). Financial Development and Economic Growth: New Evidence from Panel Data. The Quarterly Review of Economics and Finance, 51, 88-104.
Miller, M.H. (1998). Financial Markets and Economic Growth. Journal of Applied Corporate Finance, 11(3), 8-15.
Mobarak, A. & Azarpeyvand, Z. (2009). Take The Indicators of Good Governance from The Perspective of Islam and Its Impact on Economic Growth. Islamic Economics, 9, No. 36, 179-208. (In Persian).
Monsef, A., Torki, L. & Alavi, S.J. (2013). Investigation of the Effects of Financial Development on Economic Growth in D-8 Countries Group: a Bootstrap Panel Granger Causality Analysis. Quarterly Journal of Economic Growth and Development Research, 10, 73-92. (In Persian).
Nadiri, M. & Mohammadi, T. (2011). The Effect of Institutional Structures on Economic Growth Using GMM Dynamic Panel Data. Quarterly Journal of Economic modelling, 5, 3(15), 1-24. (In Persian).
Rafighorrahman, A.T. (2005). Improve of the Government Performance through Administrative System Reform "Participatory Perspective". Mohammad Saffar, First Edition, Tehran: Management and Planning Organization Publications of Iran, Department of Development Management and Human Capital. (In Persian).
Rahmayanti, Y., & Horn, T. (2011). Expenditure Efficiency and the Optimal Size of Government in Developing Countries. Global Economy and Finance Journal, Vol. 4. No. 2, 46-59.
Rasekhi, S. & Ranjbar, O. (2009). An Examination of Financial Development Effect on OIC Member Vountries. Journal of Knowledge and Development, 27, 1-22. (In Persian).
Rasti, M. (2009). Investigation of Relationship between Economic Growth and Financial Development in OPEC Countries: Testing for Patrick Hypotheses. Journal of Trade Reviews, 38, 59-67. (In Persian).
Robinson, J. (1952). The Rate of Interest and Other Essays. London, McMillan.
Rousseau, P.L., & Wachtel, P. (2000). Equity Markets and Growth: Cross-Country Evidence on Timing and Outcomes, 1980–1995. Journal of Banking and Finance, 24, 1933– 1957.
Sadrosky, P. (2011). Financial Development and Energy Consumption in Central and Eastern European Frontier Economies. Energy Policy, 39, 999–1006.
Sahabi, B., Etesami, M. & Aminpour, K. (2013). Effect of Good Governance and Government Size on Financial Development in Selected Countries. Journal of Economic Growth and Development Research, 3, No. 12, 105-118. (In Persian).
Samadi, A.H. (2010). Social Capital and Financial Development: The Case of Iran (1971-2006). Economic Research, 44(3), 117-144. (In Persian).
Sameti, M., Ranjbar, H. & Mohseni, F. (2011). Analysis of The Impact of Good Governance Indicators on The Human Development Index: The Case of South East Asian Nations (ASEAN). Journal of Economic Growth and Development Research, 1, No. 4, 183-223. (In Persian).
Salmani, B. & Amiri, B. (2010). Financial Development and Economic Growth: the Case of Developing Countries. Quarterly Journal of Quantitative Economics, 6(4), 125-145. (In Persian).
Seyfipur, R. (2010). Empirical Investigation of Financial Development Effect on Economic Growth. Journal of Financial Studies, 6, 49-70. (In Persian).
Shahabadi, A. & Pourjavan, A. (2010). Governance, Competitiveness and Economic Growth in Selected Countries. Yas Strategy, No. 22, 129-168. (In Persian).
Shahabadi, A. & Pourjavan, A. (2012). The Relationship Between Governance and Socio-Economic Development Indicators of Selected Countries. Journal of Social Sciences of Literature and Human Sciences Faculty of Ferdowsi University of Mashhad, 9, No. 2, 53-75. (In Persian).
Shan, J., Morris, A. & Sun, F. (2001). Financial Development and Economic Growth: An Egg-Chicken Problem?. Review of International Economics, 9, 443–454.
Shaw, E.S. (1973). Finincial Deepening in Economic Development. New York, Oxford Univresity Press.
Taghavi, M., Amiri, H. & Mohamadian, A. (2011). Financial Development and Economic Growth in the MENA Countries: A Dynamic Panel GMM. Financial Knowledge of Security Analysis (Financial Studies), 10, 63-82. (In Persian).
Yong, K.H. (2010). Human Development and Government Effectiveness. Oxford University Press, Washington, DC.
CAPTCHA Image