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Testing for output convergence: a re-examination

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  • Yin-Wong Cheung
  • Antonio Garcia Pascual

Abstract

This paper investigates output convergence for the G7 countries using panel time-series techniques. We consider both the null hypotheses of no convergence and convergence. It is shown that inferences on output convergence depend on which one of the two null hypotheses is considered. Further, the no convergence results reported in previous studies using the time-series definition may be attributed to the low power of the test procedures being used. Our results also highlight some potential problems on interpreting results from some typical panel unit root and stationarity tests. Copyright 2004, Oxford University Press.

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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 56 (2004)
Issue (Month): 1 (January)
Pages: 45-63

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Handle: RePEc:oup:oxecpp:v:56:y:2004:i:1:p:45-63

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