Balance of payments constrained growth in Turkey: Evidence from ardl bound testing approach
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The aim of this study is to empirically test the validity of Thirlwall's Law in Turkey during the period of 1980:1-2006:4 using an Autoregressive Distributed Lag (ARDL) Bounds testing approach. The empirical results reveal that import is cointegrated with relative price and income. The estimates of the long run elasticities from this function are used to compute the equilibrium growth rate. The difference between the equilibrium and actual economic growth rates are small Nevertheless, results from regressions of equilibrium growth rates indicate that the Thirlwall's law does not hold for Turkey.