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Persistence in Convergence

Author

Listed:
  • Thanasis Stengos

    (University of Guelph)

  • M. Ege Yazgan

    (Istanbul Bilgi University)

Abstract

In this paper, we examine the convergence hypothesis using a long memory framework that allows for structural breaks and the non reliance on a benchmark country. We find that even though the long memory framework of analysis is much richer than the simple I(1)=I(0) alternative, a simple absolute divergence and rapid convergence dichotomy produced by the latter is sufficient to capture the behavior of the gaps in per capita GDP levels and growth rates results respectively. This is in contrast to the findings of Dufrénot, Mignon and Naccache (2009) who found strong evidence of long memory for output gaps. The speed of convergence captured by the estimated long memory parameter d, is explained by differences in physical and human capital as well as fiscal discipline characteristics of economic policies pursued by different countries.

Suggested Citation

  • Thanasis Stengos & M. Ege Yazgan, 2011. "Persistence in Convergence," Working Paper series 34_11, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:34_11
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    Cited by:

    1. Stengos Thanasis & Yazgan M. Ege, 2014. "Persistence in real exchange rate convergence," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(1), pages 73-88, February.
    2. Nicholas Apergis & Christina Christou & Rangan Gupta & Stephen M. Miller, 2015. "Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across the U.S. States," Working Papers 201539, University of Pretoria, Department of Economics.
    3. Gabrieli, Tommaso & Panagiotidis, Theodore & Xu, Yishuang, 2019. "Pair-wise convergence of intra-city house prices in Beijing," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    4. Thanasis Stengos & Ege Yazgan & Harun Ozkan, 2016. "Persistence in Convergence: Some further results," Working Papers 1605, University of Guelph, Department of Economics and Finance.
    5. Thanasis Stengos & M. Ege Yazgan & Harun Özkan, 2018. "Persistence In Convergence And Club Formation," Bulletin of Economic Research, Wiley Blackwell, vol. 70(2), pages 119-138, April.
    6. Lena Dräger & Theoplasti Kolaiti & Philipp Sibbertsen, 2023. "Measuring macroeconomic convergence and divergence within EMU using long memory," Empirical Economics, Springer, vol. 65(5), pages 2333-2356, November.
    7. Yazgan, M. Ege & Yilmazkuday, Hakan, 2011. "Price-level convergence: New evidence from U.S. cities," Economics Letters, Elsevier, vol. 110(2), pages 76-78, February.
    8. Beylunioğlu, Fuat C. & Yazgan, M. Ege & Stengos, Thanasis, 2020. "Detecting Convergence Clubs," Macroeconomic Dynamics, Cambridge University Press, vol. 24(3), pages 629-669, April.
    9. Yazgan, M. Ege & Özkan, Harun, 2015. "Detecting structural changes using wavelets," Finance Research Letters, Elsevier, vol. 12(C), pages 23-37.
    10. M. Ege Yazgan & Hakan Yilmazkuday, 2016. "High versus low inflation: implications for price-level convergence," Empirical Economics, Springer, vol. 50(4), pages 1527-1563, June.
    11. Theodoros Arvanitopoulos & Vassilis Monastiriotis & Theodore Panagiotidis, 2021. "Drivers of convergence: The role of first- and second-nature geography," Urban Studies, Urban Studies Journal Limited, vol. 58(14), pages 2880-2900, November.
    12. Nicholas Apergis & Christina Christou & Rangan Gupta & Stephen M. Miller, 2018. "Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across States in the U.S," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(2), pages 147-161, May.
    13. Nicholas Apergis & Arusha Cooray, 2016. "Old Wine In A New Bottle: Trade Openness And Fdi Flows—Are The Emerging Economies Converging?," Contemporary Economic Policy, Western Economic Association International, vol. 34(2), pages 336-351, April.

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    More about this item

    Keywords

    growth convergence; long memory;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • 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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