Abstract
This study investigates the relationship between economic growth and democracy by estimating a nation’s production function specified as static and dynamic models using panel data. The production function applies a single time trend, multiple time trends, and general index formulations to the translog production function to capture time effects representing technological changes of unknown forms. In addition, implementing the technology shifters model enabled this study to find possible known channels between economic growth and democracy. Empirical results based on a panel data of 144 countries observed for 1980–2014 show that democracy had a robust positive impact on economic growth. Credit guarantee is one of the most significant positive links between economic growth and democracy. In order to check the robustness of these results, a dynamic model constructed with a flexible adjustment speed and a target level of GDP also is tested.
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