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Empirics for Economic Growth and Convergence

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  • Danny Quah
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    Abstract

    The convergence hypotehsis has genreated a huge empriical literature: this paper critically reviews some of the earlier key findings, clarifies their implications, and relates thme to more recent results. Particular attention is devoted to interpreting convergence empirics. The mian finding s are: (1) The much-heralded uniform 2% rate of convergence could arise for reasons unrelated to the dynamics of economic growth (2) Usual empirical analyses- cross section (conditional) convergence regressions, time series modelling, panel data analysis - can be misleading for understanding convergence; a model polarization in economic growth clarifies these difficulties. (3) The data, more revealingly modelled, show persistence and immobility across countries: some evidence supprots Baumol's ideal of "convergence clubs"; some evidence shows the poor getting poorer, and the rich richer, with the middle class vanishing. (4) Convergence, unambiguous up to sampling error, is observed across US states.

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    File URL: http://cep.lse.ac.uk/pubs/download/DP0253.pdf
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    Bibliographic Info

    Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0253.

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    Date of creation: Jul 1995
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    Handle: RePEc:cep:cepdps:dp0253

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    Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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    1. Quah, D., 1993. "One Business Cycle and One Trend From(Many) Many Disaggregates," Papers 550, Stockholm - International Economic Studies.
    2. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
    3. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
    4. Durlauf, S.M. & Johnson, P.A., 1995. "Multiple Regimes and Cross-Country Growth Behavior," Working papers 9419r, Wisconsin Madison - Social Systems.
    5. Ben-David, Dan, 1994. "Convergence Clubs and Diverging Economies," CEPR Discussion Papers 922, C.E.P.R. Discussion Papers.
    6. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
    7. Helpman, E., 1992. "Innovation, Imitation and intellectual Property Rights," Harvard Institute of Economic Research Working Papers 1597, Harvard - Institute of Economic Research.
    8. Danny Quah, 1992. "Empirical Cross-Section Dynamics in Economic Growth," FMG Discussion Papers dp154, Financial Markets Group.
    9. Esteban, J.M. & Ray, D., 1992. "On the Measurement of Polarization," UFAE and IAE Working Papers 171.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    10. Quah, Danny T, 1996. " Convergence Empirics across Economies with (Some) Capital Mobility," Journal of Economic Growth, Springer, vol. 1(1), pages 95-124, March.
    11. Eaton, Jonathan & Eckstein, Zvi, 1997. "Cities and growth: Theory and evidence from France and Japan," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 443-474, August.
    12. R Koopmans & A Lamo, 1995. "Cross-Sectional Firm Dynamics: Theory and Empirical Results from the Chemical Sector," CEP Discussion Papers dp0229, Centre for Economic Performance, LSE.
    13. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-66, April.
    14. Danny Quah, 1993. "Exploiting Cross Section Variation for Unit Root Inference in Dynamic Data," FMG Discussion Papers dp171, Financial Markets Group.
    15. A. Desdoigts, 1995. "Changes in the World Income Distribution: a Non-Parametric Approach to Challenge the Neo-Classical Convergence Argument," SFB 373 Discussion Papers 1995,15, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
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    Cited by:
    1. Giuseppe Carone & C�cile Denis & Kieran Mc Morrow & Gilles Mourre & Werner R�ger, 2006. "Long-term labour productivity and GDP projections for the EU25 Member States : a production function framework," European Economy - Economic Papers 253, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
    2. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
    3. Capolupo, Rosa, 2008. "The New Growth Theories and Their Empirics after Twenty Years," Economics Discussion Papers 2008-27, Kiel Institute for the World Economy.
    4. Michelacci, C. & Zaffaroni, P., 1998. "(Fractional) Beta Convergence," Papers 9803, Centro de Estudios Monetarios Y Financieros-.
    5. Carmela Martin & Francisco J. Velazquez & Bernard Funck, 2001. "European Integration and Income Convergence : Lessons for Central and Eastern European Countries," World Bank Publications, The World Bank, number 13968, January.
    6. FE, Doukouré Charles, 2010. "Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA
      [Tariffs Reduction and Real Convergence in WAEMU]
      ," MPRA Paper 26763, University Library of Munich, Germany.
    7. Coulombe, Serge & Lee, Frank C., 1998. "Évolution à long terme de la convergence régionale au Canada," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(1), pages 5-27, mars.
    8. Marie-Eve Mulquin & Katja Senger, 2011. "Interregional transfers and economic convergence of regions," S�rie Politique Economique 58, Facult�s Universitaires Notre-Dame de la Paix, Centre de Recherches en Economie R�gionale et Politique Economique.
    9. Péter Halmai & Viktória Vásáry, 2012. "Convergence crisis: economic crisis and convergence in the European Union," International Economics and Economic Policy, Springer, vol. 9(3), pages 297-322, September.
    10. Freeman, Donald G. & Yerger, David B., 2001. "Interpreting cross-section and time-series tests of convergence: the case of labor productivity in manufacturing," Journal of Economics and Business, Elsevier, vol. 53(6), pages 593-607.

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