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An Alternative Interpretation of Conditional Convergence Results

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  • Cho, Dongchul
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    Abstract

    This paper focuses on the endogeneity of the investment-to-GDP ratio and the population growth rate, two of the most frequently used control variables in cross-country growth regressions for the convergence test. The Summers-Heston data (1988) show that the former rises and the latter declines with income growth. When the indirect, yet endogenous, effects through these control variables are taken into account and simultaneity bias is corrected, relatively high income countries appear to grow faster than low income countries. This interpretation sharply contrasts with the conditional convergence interpretation based on the assumption of exogenous control variables. Copyright 1996 by Ohio State University Press.

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    Bibliographic Info

    Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

    Volume (Year): 28 (1996)
    Issue (Month): 4 (November)
    Pages: 669-81

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    Handle: RePEc:mcb:jmoncb:v:28:y:1996:i:4:p:669-81

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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    Cited by:
    1. Celal Kucuker, 2003. "Türkiye Ýktisat Kongresi Büyüme Stratejileri Çalýþma Grubu," Working Papers 2003/5, Turkish Economic Association.
    2. Larry E. Jones & Rodolfo E. Manuelli, 2000. "Endogenous policy choice: the case of pollution and growth," Staff Report 276, Federal Reserve Bank of Minneapolis.
    3. NGELEZA, Guyslain K. & FLORAX, Raymond J.G.M. & MASTERS, William A, 2011. "Spatial Inequality: Overcoming Neighborhood Effects In Africa," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(2).
    4. Cem Ertur & Thiaw Kalidou, 2005. "Growth and Spatial Dependence - The Mankiw, Romer and Weil model revisited," ERSA conference papers ersa05p660, European Regional Science Association.
    5. Beverly Hirtle, 2008. "Credit derivatives and bank credit supply," Staff Reports 276, Federal Reserve Bank of New York.
    6. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2005. "A Meta-Analysis of Beta-Convergence: The Legendary Two-Percent," Tinbergen Institute Discussion Papers 05-001/3, Tinbergen Institute.
    7. Yudon, Y. & Weeks, M., 2000. "Provincial Income Convergence in China, 1953-1997: a Panel Data Approach," Cambridge Working Papers in Economics 0010, Faculty of Economics, University of Cambridge.
    8. Guyslain K. Ngeleza & Raymond J.G.M. Florax & William A. Masters, 2006. "Geographic And Institutional Determinants Of Real Income:A Spatio-Temporal Simultaneous Equation Approach," Working Papers 06-15, Purdue University, College of Agriculture, Department of Agricultural Economics.
    9. Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
    10. Rómulo Chumacero, 2002. "Reviewing the Evidence against Absolute Convergence," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 4, pages 115-134 Central Bank of Chile.
    11. Rómulo A. Chumacero, 2002. "Is There Enough Evidence Against Absolute Convergence?," Working Papers Central Bank of Chile 176, Central Bank of Chile.
    12. repec:dgr:uvatin:2005001 is not listed on IDEAS
    13. M Jess Freire-Ser?, . "Human Capital Accumulation And Economic Growth," UFAE and IAE Working Papers 435.99, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).

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