Convergence tests implicitly test the unit root hypothesis for per capita income. Although the statistics do not have critical values under the null hypothesis most papers on this subject use them, with the corresponding problems for inference. This paper determines the existence of convergence in GDP levels and income across the regions of Chile using the traditional tests and also recent unit root tests for panel data that allow for correct inferences. We also analyze convergence in dispersion, evaluating the presence of asymmetries or the formation of regional “clubs” using nonparametric tests. Our main conclusions are: (1) the evidence supports the hypothesis of absolute â convergence in both per capita GDP and income; (2) the convergence rate is higher for income than for GDP; (3) the conditional convergence rate increases when we control for the share of mining on the regional productive structure; (4) the data do not support the existence of convergence clubs; and (5) there is no clear evidence of convergence.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
Find related papers by JEL classification: O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General N16 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - Latin America; Caribbean R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
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