Investigating the Effects of Improving Government Size and Institutional Quality on Economic Growth In developing and developed countries

In this research, the relationship between government size and institutional quality with economic growth in the framework of a comprehensive and complete model has been studied in relation to other studies, and also with the econometric approach of Panel Smooth Transition regression model (PSTR) as one of the most prominent models regime modifications have been investigated in panel data and are trying to overcome the problems in previous empirical studies. In this research, the simple average of four indicators of economic freedom of the indicators (ICRG), six good governance indicators as institutional indicators, government size, the index of institutions guaranteeing the implementation of contracts and human capital on the economic growth of the  countries studied in the period 19951995- was used. After performing the reliability test of the variables, the nonlinear least squares method (NLS) was used to estimate and the results in this group of countries were rejected by the linearity hypothesis, a two-regime with a threshold size of 01625/6251,0/ for institutional quality indicators in The research countries suggest that the results of the research shows that the positive effects of institutional quality indicators, the effectiveness of government size, economic freedom, human capital and other control variables on economic growth in the studied countries, however, are more intense than the thresholds calculated for Indicators of institutional quality are indicators of economic freedom. In addition,
physical capital variables in both regimes have a positive effect on economic growth.