Empiric analysis of kaldor-verdoorn and thirlwall laws: multiple country model

Anthony THIRLWALL, stated that under a country's balance of payment, the ratio of growth in this country depend on; relative price in short term, rates of exchange in currencys, national income rates, other nation's yearly earned income rates, the flexibility of prices on import and export goods, the national demand and international demand of income. Basic factor that impact the relative prices in a country which is determined by the ratio of Verdoorn coefficient; is productivity increase. Productivity increase will also decrease the relative prices and increase the exports and the growth of the counrty. In the short-term hypothesis of Thirlwall; he stated that the main effect that could majorly impact the growth is to expertise on the goods that have the largest flexible income. Thirlwall's short term hypothesis on the growth has been intitled as a strong hypothesis. Thirlwall also added the capital flow onto his growth model, and stated that capital flow will not be the effective way of lowering the currency exchange rates in long term. According to Thirlwalls hypothesis in long term, he defined the relative prices (considering stable exchange rates and price flexibilty) the growth of a country is the ratio of the increase in exporting to the ratio of demand on the import goods in flexible income. This definition is Thirlwall's weak hypothesis. In this thesis, Thirlwall's weak hypothesis is being analyzed and challenged by using ARDL bound test aproach (Peseran, Shin and Smith 2001) for countries such as Argentina, Brasil, Japan, Turkey, United Kingdom and the United States in time period of 1962-2015. As a result of this analysis and challange Thirlwall's hypothesis have been found 95% significant in Japan, the United Kingdom and the United States, 90% significant in statistics for Turkey, however; it has been found irrelavant in either significance level in statistics for Argentina and Brasil.