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The Significance of Governance in Relationship to Economic Growth and Monetary Policy: An Analysis for Selected Countries

Year 2022, Volume: 24 Issue: 2, 453 - 473, 30.12.2022

Abstract

Institutionalization and its significance, which neoclassical economics has neglected for a while, have recently started to show themselves with the contributions of the institutional economics approach. Governance, an approach in which the public and private sectors, non-governmental organizations, and citizens interact with each other and participate in the decision-making processes, especially in the field of public economy, forms the basis of institutionalization. In this respect, the effect of monetary policy on economic growth has been investigated in the institutional framework for countries with different income levels in the study. Estimates made using the dynamic panel data method cover 35 high-income, 16 upper-middle-income, and 16 lower-middle-income countries and the period 2002-2020. Findings confirm that the effect of contractionary monetary policy on growth is negative in all country groups. On the other hand, it has been concluded that the effects of institutionalization are positive in high and upper-middle-income countries and the increase in institutional quality reduces the negative impact of contractionary monetary policy on growth. In terms of lower-middle-income countries, it has been deduced that the effects of institutionalization are statistically insignificant.

References

  • Abrams, B. ve K. Lewis (1995). Cultural and Institutional Determinants of Economic Growth: A Cross-Section Analysis. Public Choice, 83(3), 273-289.
  • Acemoğlu, D., Johnson, S. ve Robinson, J. (2004). Institutions as the Fundamental Cause of Long Run Growth. Cambridge: National Bureau of Economic Research (NBER) Working Paper. (No. 10481).
  • Acemoğlu, D. (2006a). Modeling Inefficient Institutions. In: Blundell, R., Newey, W. K. & Persson, T. (Eds.), Advances in Economics and Econometrics Theory and Applications Ninth World Congress (pp. 341-380). Cambridge: Cambridge University Press.
  • Acemoğlu, D. (2006b). A Simple Model of İnefficient İnstitutions. Scandinavian Journal of Economics. 108(4), 515-546.
  • Acemoğlu, D. (2008). Interactions Between Governance and Growth: What World Bank Economics Need to Know in Governance. In: North, D., Acemoglu, D., Fukuyama, F. & Rodrik, D. (Eds.), Governance, Growth and Development Decision-Making (pp. 1-8). Washington: The World Bank.
  • Acemoğlu, D. (2010). Institutions and Development, İnstitutions, Factor Prices and Taxation: Virtues of Strong States. The American Economic Review, 100(2), 115-119.
  • Acemoğlu, D. ve Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity and Poverty, London: Profile Books.
  • Akçay, S. (2011). Yolsuzluk, Ekonomik Özgürlükler ve Demokrasi. Sosyal ve Beşeri Bilimler Araştırmaları Dergisi, 1(1).
  • Arellano, M. ve Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297.
  • Artan, S. ve Hayaloğlu, P. (2013). Ülkelerarası Büyüme Farklılıklarının Açıklanmasında Kurumsal Yapının Rolü: Panel Veri Analizi. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 8(3).
  • Asteriou, D. ve Price, S. (2001). Political Instability and Economic Growth: UK Time Series Evidence. Scottish Journal of Political Economy, 48(4), 383-399.
  • Aysun, U., Brady, R. ve Honig, A. (2013). Financial Frictions and The Strength of Monetary Transmission. Journal of International Money and Finance, 32, 1097-1119.
  • Baltagi, B. H. (2005). Econometric Analysis of Panel Data. England: John Wiley & Sons Ltd.
  • Barro, R. J. (1996). Democracy and Growth. Journal of Economic Growth, 1(1), 1-27.
  • Berry, W., Golder, D. M. ve D. Milton (2012). Improving Tests of Theories Positing Interaction. The Journal of Politics, 74(3), 653-671.
  • Breusch, T. S. ve Pagan, A. R. (1980). The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics. The Review of Economic Studies, 47(1), 239-253.
  • Buchanan, J. ve Tullock, G. (1962). The Calculus of Consent, Logical Foundations of Constitutional Democracy. Ann Arbor: University of Michigan Press.
  • Canh, N. P. (2018). The Effectiveness of Fiscal Policy: Contributions from Institutions and External Debts. Journal of Asian Business and Economic Studies, 25(1), 50-66.
  • Cecchetti, S. G. (1999). Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism. New York: National Bureau of Economic Research.
  • Claessens, S. ve Laeven, L. (2003). Financial Development, Property Rights, and Growth. The Journal of Finance, 58(6), 2401-2436.
  • Dawson, J. W. (2003). Causality In The Freedom–Growth Relationship. European Journal of Political Economy, 19(3), 479-495.
  • Devereux, M. B. ve Wen, J.-F. (1998). Political Instability, Capital Taxation, and Growth. European Economic Review, 42(9), 1635-1651.
  • Duncan, R. (2014). Institutional Quality, the Cyclicality of Monetary Policy and Macroeconomic Volatility. Journal of Macroeconomics, 39, 113-155.
  • Eijffinger, S. C. ve Stadhouders, P. (2003). Monetary Policy and the Rule of Law. The Centre for Economic Policy Research Discussion Paper Series. (No. 3698).
  • Gollwitzer, S. ve Quintyn, M. (2010). The Effectiveness of Macroeconomic Commitment in Weak (er) Institutional Environments. Internationa Monetary Fund Working Paper. (No. WP/10/193).
  • Hansen, L. P. (1982). Large Sample Properties of Generalized Method of Moments Estimators. Econometrica, 50(4), 1029-1054.
  • Hardt, L. (2011). Conceptualizing Interdependences between Regulatory and Monetary Policies: Some Preliminary Considerations. Wersaw: National Bank of Poland.
  • Hasan, I., Wachtel, P. ve Zhou, M. (2009). Institutional Development, Financial Deepening and Economic Growth: Evidence from China. Journal of Banking & Finance, 33(1), 157-170.
  • Hayek, F. A. (1960). The Constitution of Liberty. South Bend: Gateway Editions Ltd.
  • Jung, H. ve Kwon, H. U. (2007). An Alternative System GMM Estimation in Dynamic Panel Models. Tokyo: Hitotsubashi University, 1-15.
  • Karagöz, K. & Karagöz, M. (2010). Yolsuzluk, Ekonomik Büyüme ve Kamu Harcamaları: Türkiye için Ampirik bir Analiz. Sayıştay Dergisi, 76(1-3), 5-22.
  • Kaufmann, D., Kraay, A. ve Mastruzzi, M. (2009). Governance Matters VIII: Aggregate and Individual Governance Indicators 1996-2008. The World Bank Policy Research Working Papers. (No. 4978).
  • Kaufmann, D., Kraay, A. ve Mastruzzi, M. (2011). The Worldwide Governance Indicators: Methodology and Analytical Issues. Hague Journal on the Rule of Law, 3(2), 220-246.
  • Keefer, P. ve Knack, S. (1997). Why Don't Poor Countries Catch Up? A Cross‐National Test of an Institutional Explanation. Economic Inquiry, 35(3), 590-602.
  • Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110(3), 681-712.
  • Mishra, P., Montiel, P. J. ve Spilimbergo, A. (2010). Monetary Transmission in Low Income Countries. The Centre for Economic Policy Research Discussion Paper Series. (No. 7951).
  • Nawaz, M., Mazhar-Iqbal, M. ve Ali, A. (2018). Institutional Quality and Cyclicality of Monetary and Fiscal Policies in SAARC Countries. Transylvanian Review of Administrative Sciences, 14(55), 32-44.
  • Nawaz, S. (2015). Growth Effects of Institutions: A Disaggregated Analysis. Economic Modelling, 45(C), 118-126.
  • Nickell, S. (1981). Biases in dynamic Models With Fixed Effects. Econometrica, 46(6), 1417-1426.
  • North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
  • Olson, M. L. (1965). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge. Massachusetts: Harvard University Press.
  • Olson, M. L. (1982). The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press.
  • Pesaran, M. H. (2004). General Diagnostic Tests for Cross Section Dependence in Panels. Cambridge Working Papers in Economics. (No. 0435).
  • Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross‐Section Dependence. Journal of Applied Econometrics, 22(2), 265-312.
  • Pesaran, M. H., Ullah, A. ve Yamagata, T. (2008). A Bias‐Adjusted LM Test of Error Cross‐Section Independence. The Econometrics Journal, 11(1), 105-127.
  • Redek, T. ve Sušjan, A. (2005). The Impact of Institutions on Economic Growth: The Case of Transition Economies. Journal of Economic Issues, 39(4), 995-1027.
  • Rodrik, D. ve Subramanian, A. (2009). Why Did Financial Globalization Disappoint?. IMF Staff Papers, 56(1), 112-138.
  • Roodman, D. (2009). How to Do Xtabond2: An Introduction to Difference and System Gmm in Stata. The Stata Journal, 9(1), 86-136.
  • Sarafidis, V. (2008). GMM Estimation of Short Dynamic Panel Data Models with Error Cross Section Dependence. Muenchen: Munich Personal RePEc Archive (MPRA) Working Paper Series. (No. 25716).
  • Sargan, J. D. (1958). The Estimation of Economic Relationships Using Instrumental Variables. Econometrica: Journal of the Econometric Society, 26(3), 393-415.
  • Scully, G. W. (1988). The Institutional Framework and Economic Development. Journal of Political Economy, 96(3), 652-662.
  • Scully, G. W. (2002). Economic Freedom, Government Policy and the Trade-Off Between Equity and Economic Growth. Public Choice, 113(1), 77-96.
  • Stigler, G. (1971). The Theory of Economic Regulation. Bell Journal of Economics and Management Science. 2(1), 3-21.
  • Tatoğlu, F. Y. (2017). Panel Zaman Serileri Analizi: Stata Uygulamalı. İstanbul: Beta.
  • Tavares, J. ve Wacziarg, R. (2001). How Democracy Affects Growth. European Economic Review, 45(8), 1341-1378.
  • Von Mises, L. (1949). Human Action: A Treatise on Economics. New Haven: Yale University Press.
  • Williamson, O. E. (1979). Transaction Cost Economics: The Governance of Contractual Relations. The journal of Law and Economics, 22(2), 233-261.
  • Yapraklı, S. (2008). Kurumsal Yapının Ekonomik Büyümeye Etkisi: Üst Orta Gelir Duzeyindeki Ülkeler Üzerine Bir Uygulama. Ege Academic Review, 8(1), 301-317.

Kurumsallaşmanın Ekonomik Büyüme Para Politikası İlişkisindeki Önemi: Seçili Ülkeler İçin Bir Analiz

Year 2022, Volume: 24 Issue: 2, 453 - 473, 30.12.2022

Abstract

Neoklasik iktisadın bir süredir ihmal ettiği kurumsallaşma ve önemi, son zamanlarda kurumsal iktisat yaklaşımının katkılarıyla kendini göstermeye başlamıştır. Kamu ve özel sektör ile sivil toplum kuruluşlarının ve vatandaşların birbirleriyle etkileşim içinde olduğu ve özellikle kamu ekonomisi alanında karar alma süreçlerine katıldığı bir yaklaşım olan yönetişim, kurumsallaşmanın temelini oluşturmaktadır. Bu doğrultuda çalışmada farklı gelir düzeyine sahip ülkeler için para politikasının ekonomik büyüme üzerindeki etkisi kurumsal çerçevede araştırılmıştır. Dinamik panel veri yöntemi kullanılarak yapılan tahminler, 35 yüksek gelirli, 16 üst orta gelirli ve 16 alt orta gelirli ülkeyi ve 2002-2020 dönemini kapsamaktadır. Bulgular, daraltıcı para politikasının büyüme üzerindeki etkisinin tüm ülke gruplarında negatif olduğunu teyit etmektedir. Öte yandan, yüksek ve üst orta gelirli ülkelerde kurumsallaşmanın etkilerinin olumlu olduğu ve kurumsal kalitedeki artışın daraltıcı para politikasının büyüme üzerindeki olumsuz etkisini azalttığı sonucuna ulaşılmıştır. Alt orta gelirli ülkeler açısından ise kurumsallaşmanın etkilerinin istatistiksel olarak önemsiz olduğu sonucuna varılmıştır.

References

  • Abrams, B. ve K. Lewis (1995). Cultural and Institutional Determinants of Economic Growth: A Cross-Section Analysis. Public Choice, 83(3), 273-289.
  • Acemoğlu, D., Johnson, S. ve Robinson, J. (2004). Institutions as the Fundamental Cause of Long Run Growth. Cambridge: National Bureau of Economic Research (NBER) Working Paper. (No. 10481).
  • Acemoğlu, D. (2006a). Modeling Inefficient Institutions. In: Blundell, R., Newey, W. K. & Persson, T. (Eds.), Advances in Economics and Econometrics Theory and Applications Ninth World Congress (pp. 341-380). Cambridge: Cambridge University Press.
  • Acemoğlu, D. (2006b). A Simple Model of İnefficient İnstitutions. Scandinavian Journal of Economics. 108(4), 515-546.
  • Acemoğlu, D. (2008). Interactions Between Governance and Growth: What World Bank Economics Need to Know in Governance. In: North, D., Acemoglu, D., Fukuyama, F. & Rodrik, D. (Eds.), Governance, Growth and Development Decision-Making (pp. 1-8). Washington: The World Bank.
  • Acemoğlu, D. (2010). Institutions and Development, İnstitutions, Factor Prices and Taxation: Virtues of Strong States. The American Economic Review, 100(2), 115-119.
  • Acemoğlu, D. ve Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity and Poverty, London: Profile Books.
  • Akçay, S. (2011). Yolsuzluk, Ekonomik Özgürlükler ve Demokrasi. Sosyal ve Beşeri Bilimler Araştırmaları Dergisi, 1(1).
  • Arellano, M. ve Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297.
  • Artan, S. ve Hayaloğlu, P. (2013). Ülkelerarası Büyüme Farklılıklarının Açıklanmasında Kurumsal Yapının Rolü: Panel Veri Analizi. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 8(3).
  • Asteriou, D. ve Price, S. (2001). Political Instability and Economic Growth: UK Time Series Evidence. Scottish Journal of Political Economy, 48(4), 383-399.
  • Aysun, U., Brady, R. ve Honig, A. (2013). Financial Frictions and The Strength of Monetary Transmission. Journal of International Money and Finance, 32, 1097-1119.
  • Baltagi, B. H. (2005). Econometric Analysis of Panel Data. England: John Wiley & Sons Ltd.
  • Barro, R. J. (1996). Democracy and Growth. Journal of Economic Growth, 1(1), 1-27.
  • Berry, W., Golder, D. M. ve D. Milton (2012). Improving Tests of Theories Positing Interaction. The Journal of Politics, 74(3), 653-671.
  • Breusch, T. S. ve Pagan, A. R. (1980). The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics. The Review of Economic Studies, 47(1), 239-253.
  • Buchanan, J. ve Tullock, G. (1962). The Calculus of Consent, Logical Foundations of Constitutional Democracy. Ann Arbor: University of Michigan Press.
  • Canh, N. P. (2018). The Effectiveness of Fiscal Policy: Contributions from Institutions and External Debts. Journal of Asian Business and Economic Studies, 25(1), 50-66.
  • Cecchetti, S. G. (1999). Legal Structure, Financial Structure, and the Monetary Policy Transmission Mechanism. New York: National Bureau of Economic Research.
  • Claessens, S. ve Laeven, L. (2003). Financial Development, Property Rights, and Growth. The Journal of Finance, 58(6), 2401-2436.
  • Dawson, J. W. (2003). Causality In The Freedom–Growth Relationship. European Journal of Political Economy, 19(3), 479-495.
  • Devereux, M. B. ve Wen, J.-F. (1998). Political Instability, Capital Taxation, and Growth. European Economic Review, 42(9), 1635-1651.
  • Duncan, R. (2014). Institutional Quality, the Cyclicality of Monetary Policy and Macroeconomic Volatility. Journal of Macroeconomics, 39, 113-155.
  • Eijffinger, S. C. ve Stadhouders, P. (2003). Monetary Policy and the Rule of Law. The Centre for Economic Policy Research Discussion Paper Series. (No. 3698).
  • Gollwitzer, S. ve Quintyn, M. (2010). The Effectiveness of Macroeconomic Commitment in Weak (er) Institutional Environments. Internationa Monetary Fund Working Paper. (No. WP/10/193).
  • Hansen, L. P. (1982). Large Sample Properties of Generalized Method of Moments Estimators. Econometrica, 50(4), 1029-1054.
  • Hardt, L. (2011). Conceptualizing Interdependences between Regulatory and Monetary Policies: Some Preliminary Considerations. Wersaw: National Bank of Poland.
  • Hasan, I., Wachtel, P. ve Zhou, M. (2009). Institutional Development, Financial Deepening and Economic Growth: Evidence from China. Journal of Banking & Finance, 33(1), 157-170.
  • Hayek, F. A. (1960). The Constitution of Liberty. South Bend: Gateway Editions Ltd.
  • Jung, H. ve Kwon, H. U. (2007). An Alternative System GMM Estimation in Dynamic Panel Models. Tokyo: Hitotsubashi University, 1-15.
  • Karagöz, K. & Karagöz, M. (2010). Yolsuzluk, Ekonomik Büyüme ve Kamu Harcamaları: Türkiye için Ampirik bir Analiz. Sayıştay Dergisi, 76(1-3), 5-22.
  • Kaufmann, D., Kraay, A. ve Mastruzzi, M. (2009). Governance Matters VIII: Aggregate and Individual Governance Indicators 1996-2008. The World Bank Policy Research Working Papers. (No. 4978).
  • Kaufmann, D., Kraay, A. ve Mastruzzi, M. (2011). The Worldwide Governance Indicators: Methodology and Analytical Issues. Hague Journal on the Rule of Law, 3(2), 220-246.
  • Keefer, P. ve Knack, S. (1997). Why Don't Poor Countries Catch Up? A Cross‐National Test of an Institutional Explanation. Economic Inquiry, 35(3), 590-602.
  • Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110(3), 681-712.
  • Mishra, P., Montiel, P. J. ve Spilimbergo, A. (2010). Monetary Transmission in Low Income Countries. The Centre for Economic Policy Research Discussion Paper Series. (No. 7951).
  • Nawaz, M., Mazhar-Iqbal, M. ve Ali, A. (2018). Institutional Quality and Cyclicality of Monetary and Fiscal Policies in SAARC Countries. Transylvanian Review of Administrative Sciences, 14(55), 32-44.
  • Nawaz, S. (2015). Growth Effects of Institutions: A Disaggregated Analysis. Economic Modelling, 45(C), 118-126.
  • Nickell, S. (1981). Biases in dynamic Models With Fixed Effects. Econometrica, 46(6), 1417-1426.
  • North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
  • Olson, M. L. (1965). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge. Massachusetts: Harvard University Press.
  • Olson, M. L. (1982). The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press.
  • Pesaran, M. H. (2004). General Diagnostic Tests for Cross Section Dependence in Panels. Cambridge Working Papers in Economics. (No. 0435).
  • Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross‐Section Dependence. Journal of Applied Econometrics, 22(2), 265-312.
  • Pesaran, M. H., Ullah, A. ve Yamagata, T. (2008). A Bias‐Adjusted LM Test of Error Cross‐Section Independence. The Econometrics Journal, 11(1), 105-127.
  • Redek, T. ve Sušjan, A. (2005). The Impact of Institutions on Economic Growth: The Case of Transition Economies. Journal of Economic Issues, 39(4), 995-1027.
  • Rodrik, D. ve Subramanian, A. (2009). Why Did Financial Globalization Disappoint?. IMF Staff Papers, 56(1), 112-138.
  • Roodman, D. (2009). How to Do Xtabond2: An Introduction to Difference and System Gmm in Stata. The Stata Journal, 9(1), 86-136.
  • Sarafidis, V. (2008). GMM Estimation of Short Dynamic Panel Data Models with Error Cross Section Dependence. Muenchen: Munich Personal RePEc Archive (MPRA) Working Paper Series. (No. 25716).
  • Sargan, J. D. (1958). The Estimation of Economic Relationships Using Instrumental Variables. Econometrica: Journal of the Econometric Society, 26(3), 393-415.
  • Scully, G. W. (1988). The Institutional Framework and Economic Development. Journal of Political Economy, 96(3), 652-662.
  • Scully, G. W. (2002). Economic Freedom, Government Policy and the Trade-Off Between Equity and Economic Growth. Public Choice, 113(1), 77-96.
  • Stigler, G. (1971). The Theory of Economic Regulation. Bell Journal of Economics and Management Science. 2(1), 3-21.
  • Tatoğlu, F. Y. (2017). Panel Zaman Serileri Analizi: Stata Uygulamalı. İstanbul: Beta.
  • Tavares, J. ve Wacziarg, R. (2001). How Democracy Affects Growth. European Economic Review, 45(8), 1341-1378.
  • Von Mises, L. (1949). Human Action: A Treatise on Economics. New Haven: Yale University Press.
  • Williamson, O. E. (1979). Transaction Cost Economics: The Governance of Contractual Relations. The journal of Law and Economics, 22(2), 233-261.
  • Yapraklı, S. (2008). Kurumsal Yapının Ekonomik Büyümeye Etkisi: Üst Orta Gelir Duzeyindeki Ülkeler Üzerine Bir Uygulama. Ege Academic Review, 8(1), 301-317.
There are 58 citations in total.

Details

Primary Language Turkish
Journal Section Issue
Authors

Emin Efecan Aktaş 0000-0001-7751-3275

Publication Date December 30, 2022
Submission Date June 28, 2022
Published in Issue Year 2022 Volume: 24 Issue: 2

Cite

APA Aktaş, E. E. (2022). Kurumsallaşmanın Ekonomik Büyüme Para Politikası İlişkisindeki Önemi: Seçili Ülkeler İçin Bir Analiz. Kastamonu Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi, 24(2), 453-473. https://doi.org/10.21180/iibfdkastamonu.1137353