Empirical analysis on causal relationship between institution and economic development based on VAR method

Abstract

Economic development level has important effect on the institution. And economic development is an adjustment process of stock variable. Thus, it is difficult to achieve desired results for the institution transplanting. Under different conditions and during different period, the relationship between the institution and economic development is different. A theoretical model on causal relationship between institution and economic development was established, based on VAR (vector auto-regression) method, and the relationship was affirmed.