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Testing for Stochastic and Beta-convergence in Latin American Countries

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  • Escobari, Diego

Abstract

This paper uses time-series data from nineteen Latin American countries and the U.S. to test for income convergence using two existing definitions of convergence and a new testable definition of β-convergence. Only Dominican Republic and Paraguay were found to pair-wise converge according to the Bernard and Durlauf (1995) definition. More evidence of stochastic convergence exists when allowing for structural breaks using the two-break minimum LM unit root of Lee and Strazicich (2003). The results show greater evidence of convergence within Central America than within South America. Dominican Republic is the only country that complies with the neoclassical conditions of income convergence.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36741.

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Date of creation: May 2011
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Publication status: Published in Applied Econometrics and International Development 2.11(2011): pp. 123-138
Handle: RePEc:pra:mprapa:36741

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Keywords: Economic growth; Convergence; Latin America; Time-series;

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  1. Perron, Pierre & Vogelsang, Timothy J, 1992. "Testing for a Unit Root in a Time Series with a Changing Mean: Corrections and Extensions," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 10(4), pages 467-70, October.
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  5. Escobari, Diego, 2011. "Testing for Stochastic and Beta-convergence in Latin American Countries," MPRA Paper 36741, University Library of Munich, Germany.
  6. KARRAS, Georgios, 2008. "GROWTH AND CONVERGENCE, 1950-2003. What Can We Learn from the Solow Model?," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 8(1), pages 5-18.
  7. Strazicich, Mark C. & Lee, Junsoo & Day, Edward, 2004. "Are incomes converging among OECD countries? Time series evidence with two structural breaks," Journal of Macroeconomics, Elsevier, Elsevier, vol. 26(1), pages 131-145, March.
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Cited by:
  1. Goodness C. Aye & Samrat Goswami & Rangan Gupta, 2012. "Metropolitan House Prices In India: Do They Converge?," Working Papers, University of Pretoria, Department of Economics 201220, University of Pretoria, Department of Economics.
  2. Escobari, Diego & Damianov, Damian & Bello, Andres, 2012. "A time series test to identify housing bubbles," MPRA Paper 44360, University Library of Munich, Germany.
  3. Aye, G.C. & Goswami, S. & Gupta, R., 2013. "Metropolitan House Prices In Regions of India: Do They Converge?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 13(1), pages 135-144.
  4. Escobari, Diego, 2011. "Testing for Stochastic and Beta-convergence in Latin American Countries," MPRA Paper 36741, University Library of Munich, Germany.
  5. Sperlich, Y., 2013. "Comparing the Speed of Convergence in American Integration Areas," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 13(1), pages 77-88.

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