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Convergence Across the United States: Evidence from Panel ESTAR Unit Root Test

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  • Chi-Keung Lau

Abstract

Many empirical studies try to test whether there is income convergence across metropolitan areas in the continental United States. Drennan et al. (Journal of Economic Geography 4(5), 2004 ) claim that income among metropolitan economies is diverging for the period 1969–2001, after applying univariate unit root tests to the time series data. This paper brings new information to this area of study by using the nonlinear panel unit root test of the Exponential Smooth Auto-Regressive Augmented Dickey–Fuller (ESTAR-ADF) unit root test on the time series data for the period 1929–2005. Our results find evidence of stationarity for time series and thereby support beta and sigma convergence among states in a nonlinear setup. However, when the non-linear test encompasses cross section dependence as advocated by Cerrato et al. ( 2008 ), the evidence is attenuated. Copyright International Atlantic Economic Society 2010

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  • Chi-Keung Lau, 2010. "Convergence Across the United States: Evidence from Panel ESTAR Unit Root Test," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(1), pages 52-64, February.
    • Handle: RePEc:kap:iaecre:v:16:y:2010:i:1:p:52-64:10.1007/s11294-009-9241-8
    DOI: 10.1007/s11294-009-9241-8
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    More about this item

    Keywords

    United States income convergence; Nonlinear panel unitroottest; ESTAR; Cross section dependence; C10; F01; J10; O10; O40;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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