The effect of good governance on the business cycles on Iran and OECD countries

Neda Jahanarai, Roghayeh Abdolinejad, S. Abdolmajid Jalaee

Abstract


This paper investigates the good governance effect on business cycles. As business cycles are related to economic growth, the model used in this paper is within the framework of apsis. The period under study is 1996-2014 for Iran and OECD countries. The model was estimated by Panel data. The results indicated that the government effectiveness index is more effective among the six good governance indicators. Improving the good governance indicators will result in the government increased efficiency and effectiveness; Consequently, the growth rate would be increased, as well. Also, improvement of these indicators can decline fluctuations. According to the relationship of the production positive growth rate (peaks) with economic prosperity and negative growth rate (Perigees) with depression, the improvement of good governance indicators can have an effective role in the control of the business cycles.

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