A Re-Examination of Kaldor’s Engine-of-Economic Growth Hypothesis for the Turkish Economy
A Re-Examination of Kaldor’s Engine-of-Economic Growth Hypothesis for the Turkish Economy

Summary/Abstract: The purpose of this study is to re-examine the validity of Kaldor’s engine-of-economic growth hypothesis (1966) for the Turkish economy in the context of time series analyses. The data used in this study are quarterly and cover the period of 1998: Q1- 2015: Q4. The Auto regressive Distributed Lag (ARDL) bounds testing approach to co-integration was used to investigate the long-run dynamic relationship between industrial and non-industrial aggregate outputs. The results identify the long-run relationship between industrial and non-industrial economic performance. The Toda-Yamamoto approach to Granger causality test was employed to detect the causal links between industrial output and non-industrial aggregate output. Causality test results also support the causal implication of the engine-of-growth hypothesis for the case of Turkey.

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