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Convergence or divergence in cross-country growth?

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Author Info

  • Stephen Dobson
  • Carlyn Ramlogan-Dobson
  • Eric Strobl

Abstract

In the traditional empirical convergence literature, a negative coefficient on initial income in a cross-country growth regression is interpreted as evidence of poor countries growing faster than richer ones. A key assumption in this work is that the relationship between initial income and income growth is linear. The linearity assumption is challenged in some new growth theories, and studies adopting an alternative (semi-parametric or nonlinear) econometric methodology provide support for a nonlinear specification. This paper finds evidence for nonlinear convergence. Using semi-parametric estimation we find that convergence occurs among countries with very low and very high initial incomes, suggesting that convergence clubs characterize the cross-country growth process. Our results provide further evidence for multiple-regime steady states.

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File URL: http://hdl.handle.net/10.1080/02692171.2011.557058
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 26 (2012)
Issue (Month): 3 (November)
Pages: 417-424

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Handle: RePEc:taf:irapec:v:26:y:2012:i:3:p:417-424

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Cited by:
  1. Mate-Sanchez, Mariluz & López Hernández, Fernando A. & Lacambra, Jesus Mur, 2012. "Analyzing long-term average adjustment of financial ratios with spatial interactions," Economic Modelling, Elsevier, vol. 29(4), pages 1370-1376.
  2. H. Lehmann & M. G. Silvagni, 2013. "Is There Convergence of Russia’s Regions? Exploring the Empirical Evidence: 1995 – 2010," Working Papers wp901, Dipartimento Scienze Economiche, Universita' di Bologna.

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