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Most likely you go your way (and I'll go mine): non-convergent incomes with a new DF-Fourier test

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  • Silva Lopes, Artur C.

Abstract

Motivated by the purpose to assess the income convergence hypothesis, a simple new Fourier-type unit root test of the Dickey-Fuller family is introduced and analysed. In spite of a few shortcomings that it shares with rival tests, the proposed test generally improves upon them in terms of power performance in small samples. The empirical results that it produces for a recent and updated sample of data for 25 countries clearly contrast with previous evidence produced by the Fourier approach and, more generally, they also contradict a recent wave of optimism concerning income convergence, as they are mostly unfavourable to it.

Suggested Citation

  • Silva Lopes, Artur C., 2021. "Most likely you go your way (and I'll go mine): non-convergent incomes with a new DF-Fourier test," MPRA Paper 107676, University Library of Munich, Germany, revised 19 Mar 2021.
    • Handle: RePEc:pra:mprapa:107676
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    References listed on IDEAS

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    More about this item

    Keywords

    income convergence; unit root tests; structural breaks;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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