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Bulletin of Geography. Socio-economic Series

Extended Threshold Error Correction Model of economic growth in Israel
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Extended Threshold Error Correction Model of economic growth in Israel

Authors

  • Magdalena Osińska Nicolaus Copernicus University in Toruń https://orcid.org/0000-0002-9796-2892
  • Maciej Gałecki Uniwersytet Łódzki https://orcid.org/0000-0002-6402-8489
  • Jerzy Boehlke Uniwersytet Mikołaja Kopernika w Toruniu https://orcid.org/0000-0003-0867-5822
  • Marcin Fałdziński Uniwersytet Mikołaja Kopernika w Toruniu https://orcid.org/0000-0002-6236-8500
  • Atif Maqbool Khan Uniwersytet Mikołaja Kopernika w Toruniu https://orcid.org/0000-0003-2117-0028
  • Yochanan Shachmurove The City College and the Graduate Economic Program of the City University of New York https://orcid.org/0000-0002-0236-6474

DOI:

https://doi.org/10.12775/bgss-2022-0022

Keywords

structural break, threshold error correction model, economic growth, research and development, Israel

Abstract

The paper utilizes a comprehensive approach to threshold cointegration to analyse the Israeli per capita Gross Domestic Product (GDP) growth dynamics. The time-series data for the years 1980–2019 are taken. The study uses a two-regime threshold error correction model (TECM) to test short- and long-term growth factors. The results reveal that Research and Development (R&D) expenses measured as a percentage of GDP are the primary driving force in the long and short term. The threshold value of 3.25% of GDP exhibits a substantial difference between the two regimes corresponding to the development phases of the Israeli economy. The results are validated using various tests for threshold models. The general conclusion is that the applied hierarchical procedure for TECM model construction is robust and universal for modeling economic growth. The results allow the formulation of policy implications.

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Bulletin of Geography. Socio-economic Series

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Published

2022-07-22

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1.
OSIŃSKA, Magdalena, GAŁECKI, Maciej, BOEHLKE, Jerzy, FAŁDZIŃSKI, Marcin, KHAN, Atif Maqbool and SHACHMUROVE, Yochanan. Extended Threshold Error Correction Model of economic growth in Israel. Bulletin of Geography. Socio-economic Series. Online. 22 July 2022. No. 57, pp. 45-63. [Accessed 21 May 2025]. DOI 10.12775/bgss-2022-0022.
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No. 57 (2022): September

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Copyright (c) 2022 Magdalena Osińska, Maciej Gałecki, Jerzy Boehlke, Marcin Fałdziński, Atif Maqbool Khan, Yochanan Shachmurove

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