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Income Convergence toward USA: New Evidences for Latin and South American Countries

Author

Listed:
  • Omid Ranjbar

    (Department of Economics, Allameh-Tabataba'i University, Tehran, Iran.)

  • Tsangyao Chang

    (Department of Finance, Feng Chia University, Taichung, Taiwan.)

  • Chien-Chiang Lee

    (Department of Finance, National Sun Yat-sen University, Kaohsiung, Taiwan.)

Abstract

In this paper we test two versions of convergence hypothesis namely deterministic or conditional convergence and stochastic or catching up hypothesis using Carrion-i-Silvestre et al. (2005) stationary test. The results show Latin and South American countries (LSA) catching up process toward the USA failed in 1980s and somewhat in 1990s. But in 2000s most of them could lie in convergence path. Dispersion of break dates show that structural breaks in LSA convergence were affected by trade policies, terms of trade shocks and also war. For example, terms of trade shocks due to volatility of primary goods prices such as sugar, copper, cotton, petroleum oil, coffee, bauxite, aluminum, and rice affected the convergence process in LSA countries.

Suggested Citation

  • Omid Ranjbar & Tsangyao Chang & Chien-Chiang Lee, 2016. "Income Convergence toward USA: New Evidences for Latin and South American Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 20(2), pages 141-162, Spring.
    • Handle: RePEc:eut:journl:v:20:y:2016:i:2:p:141
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    References listed on IDEAS

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    2. Ivan Trofimov, 2021. "Income terms of trade and economic convergence: Evidence from Latin America," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(2), pages 41-67, June.

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