Regime-Dependent output convergence in Latin America
AbstractThis paper test for long-run output convergence between a sample of eight Latin American countries and over the study period 1900-2003. The key contribution of this paper is in term of the econometric methodology where non-stationarity of log real per capita income differentials is tested within a Markov regime-switching framework. In contrast to existing studies, this paper defines two new concepts of output convergence where one allows for the possibility that output differentials behaviour either switches between stationary and non-stationary regimes (partial convergence), or switches between stationary regimes characterised by differing degrees of persistence (varied convergence). Whereas standard univariate and panel data unit root testing clearly suggest that output differentials are non-stationary, employment of the regime-switching methodology indicates that most of the sample is characterised by the existence of two distinct stationary regimes. Furthermore, it is argued that the often-cit
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Bibliographic InfoArticle provided by University of Chile, Department of Economics in its journal Estudios de Economia.
Volume (Year): 33 (2006)
Issue (Month): 1 Year 2006 (June)
Output convergence; regime-switching; stationarity; unit root tests.;
Find related papers by JEL classification:
- F0 - International Economics - - General
- F3 - International Economics - - International Finance
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
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