Acta Universitatis Danubius. Œconomica, Vol 12, No 4 (2016)

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 Autoregressive 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.