Institutional variables, capital flows and GDP: a causality analysis

Author/s Giuseppe Mastromatteo, Giovanni Verga
Publishing Year 2008 Issue 2007/91 Language Italian
Pages 30 P. 25-54 File size 497 KB
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uring the last years the effects of socio-institutional and political variables on economic conditions has gained importance in the literature. This paper investigates the links between socio-institutional variables and capital inflows and GDP relative to a sample of countries for the years 2003-2004. First of all, the causality relationships between the variables under consideration are investigated and identified by means of a particular software, called TETRAD; after that, a system of equations is estimated. The results support the hypothesis that economic freedom is crucial for both capital flows and GDP. Keywords: Institutional Variables, Capital Flows, Freedom Indices, GDP, Causality

Giuseppe Mastromatteo, Giovanni Verga, Institutional variables, capital flows and GDP: a causality analysis in "STUDI ECONOMICI " 91/2007, pp 25-54, DOI: