Determinants of intense economic growth from the imperfect knowledge economic (IKE) perspective. a case of Ireland

The paper is aimed at the analysis of the determinants of the growth process in Ireland during its spectacular economic success in the last four decades. The paper is focused on the econometric analysis of the growth pattern using Threshold Error Correction models (TECM). The methodology originally introduced by Enders and Siklos (2001) has been developed to find out which variables determined the growth pattern in the long run and in the short run. Several specifications of TECM have been compared.

In 2010 Selinger proposed a concept of building a theoretical system explaining economic miracles phenomena (Selinger, 2010). In the paper the economic miracle has been understood as a transition from a very slow to a very fast growth rate in the long run as a result of the introduction of a special package of reforms that eliminates at least one barrier of growth (Balcerowicz and Rzońca ed., 2010; Acemoglu and Robinson, 2013). The choice of Ireland was straightforward because it represents one of the indentified examples of economic miracles in the last four decades. The scope of the research contains economic, social and institutional causes and conditions of the economic growth path in Ireland.

The added value of the paper consists in: analysis of the short run asymmetry of adjustment to the long run path, empirical identification of threshold variables and interpretation of the results within the context of imperfect knowledge economics (Frydman and Golberg, 2007). The choice of the imperfect knowledge economics (IKE) perspective avoids strong limitations associated with the traditional neoclassical approach.

Keywords: determinants of economic growth, institutional economics, threshold cointegration, Irish economy, IKE