Investigating the Impact of Institutional Quality Under the Petroleum Price Deregulation Policy Regime on the Economic Growth of an Emerging Economy
Résumé
Abstract The importance of institutional quality as a means of influencing economic growth is being given much attention. This paper examines the extent to which institutional quality under the price deregulation policy impacts GDP growth. The study employs the Bayesian linear regression and the auto regressive distributed lag (ARDL) models in estimating a quarterly data that spans from the first quarter of 2005 to the fourth quarter of 2020. We observe that petroleum prices impact positively on GDP growth but only in the long run while inflation impacts negatively on GDP growth in the short run. Again, we observe a short run positive relationship between foreign direct investment and GDP growth. While institutional quality impacts positively on GDP growth in the short run but negatively in the long run, the interactions of petroleum prices and institutional quality on the other had reduces GDP growth in the short run but tend to increase GDP growth comparatively more than the decrease in the short run suggesting that institutional quality under the price deregulation policy impacts on GDP growth in the long run.
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