Drivers of economic growth: a dynamic short panel data analysis using system GMM

Abstract

Abstract This research investigates the factors influencing GDP over the short-term using dynamic panel data across income groups in 71 countries, with a focus on the role of proxy COVID-19 vaccination. The analysis utilizes quarterly data spanning seven quarters from 2021Q1 to 2022Q3, employing the System Generalized Method of Moments (Sys-GMM) model developed by Blundell-Bond to assess the short-term impact of vaccination, investment, government consumption ratio, stringency index, trade openness and inflation on GDP. The findings reveal that vaccination and economic investments have a significant positive short-term effect on GDP, while the government consumption ratio and stringency index exert a strong negative influence. Conversely, trade openness and inflation do not significantly affect GDP. The study provides valuable insights for policymakers, economists, and analysts, highlighting that during the pandemic, factors such as public health measures and investments have a more critical role in economic performance of countries.

Keywords

• Economic growth
• Vaccination
• Government consumption expenditure
• Investment
• Stringency index
• System GMM