Time Series Tests of Income Convergence with Two Structural Breaks: An Update and Extension
AbstractThis paper uses newly available long-span data on real per capita incomes from 1900-2001 to test for stochastic convergence in a diverse group of 29 countries. To perform our tests, we utilize the two-break LM unit root test of Lee and Strazicich (2003) and endogenously determine two distinct structural breaks in level and trend for each country. Despite including both OECD and non-OECD countries, we find significant evidence that incomes are stochastically converging. World War II is the most often identified time period of breaks. The results represent slightly more evidence in favor of convergence than reported in the study by Dawson and Sen (forthcoming) using the same sample of countries.
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Bibliographic InfoPaper provided by Department of Economics, Appalachian State University in its series Working Papers with number 06-01.
Date of creation: 2006
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