Testing Convergence in Economic Growth for OECD Countries
AbstractIn this paper we propose a new test procedure with more general steady state information to test the convergence hypothesis for a specific economy. We consider a model where demeaned per capita output of an economy is a function of time trend and then set the convergence hypothesis as negative average slope of that model. Applying the new procedure to 22 OECD countries we find strong evidence of convergence for 20 countries towards their average level. This study also points out why using standard unit root tests with Bernard and Durlauf's (1995) definition of convergence is inappropriate.
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Bibliographic InfoPaper provided by Monash University, Department of Econometrics and Business Statistics in its series Monash Econometrics and Business Statistics Working Papers with number 14/98.
Length: 31 pages
Date of creation: 1998
Date of revision:
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Postal: PO Box 11E, Monash University, Victoria 3800, Australia
Web page: http://www.buseco.monash.edu.au/depts/ebs/
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- S. Nahar & B. Inder, 2002. "Testing convergence in economic growth for OECD countries," Applied Economics, Taylor & Francis Journals, vol. 34(16), pages 2011-2022.
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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