Do institutions matter in the very long-run? - New evidence from OECD countries

in: Applied Economics Letters, first published 07.05.2023

DOI: https://doi.org/10.1080/13504851.2023.2211333
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Institutions are an important determinant of long-run economic growth. However, most studies only examine this relationship over a relatively short period and do not regularly include institutional variables in growth models. This article applies the pooled mean group (PMG) estimator to a panel of 18 OECD countries over 138 years. We find evidence that institutions matter for economic growth in the very long-run and conclude that economists should include them in any empirical application of the neoclassical growth model. Our result is robust to various robustness checks.