Searching for factors of accelerated economic growth : the case of Ireland and Turkey

Abstract

Purpose: This study analyses the determinants of economic growth acceleration in two completely different sets of institutions provided by two example economies, using a modified threshold error correction model (TECM). Design/Methodology/Approach: The contribution is based on an extended (sequential) methodology related to a set of two-regime threshold error correction models (TECM) that helps to investigate determinants of economic growth in both long run and short run. The validation of the results were prepared using Hansen and Seo test. Supportive role of structural breaks analysis is emphasized. Findings: There exists a set of variables that determine accelerated economic growth patterns. In the export-oriented Irish economy with a stable set of institutions and well educated society the growth has been led by net exports. In the case of Turkey, periods of accelerated growth appeared in short time so the results are much diversified, taking both factors and periods of growth. Practical Implications: It is possible to indicate a diversity of the growth patterns as well as evaluate the economic policy corresponding to them. Originality/Value: The study offers an in-depth insight into econometric modelling of economic growth as well as the fluctuations around it.