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Comovement and catch-up in productivity across sectors: Evidence from the OECD

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  • Cornwell, Christopher Mark
  • Wächter, Jens-Uwe

Abstract

A method for analyzing productivity convergence based on frontier production functions is proposed. It is examined whether departures from the frontier|country{level ineciencies|exhibit long{run relationships and convergence. The method is applied to 1-digit industries of 14 OECD countries from 1970{90. Results suggests that comovements in eciency are concentrated between the EU{countries. Catch{up is found in all but one sector. Even manufacturing, which previous studies have found not to display convergence, shows signs of catch-up. It is examined whether departures from the frontier|country{level ineciencies|exhibit long{run relationships and convergence. The method is applied to 1-digit industries of 14 OECD countries from 1970{90. Results suggests that comovements in eciency are concentrated between the EU{countries. Catch{up is found in all but one sector. Even manufacturing, which previous studies have found not to display convergence, shows signs of catch{up. --

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Bibliographic Info

Paper provided by ZEI - Center for European Integration Studies, University of Bonn in its series ZEI Working Papers with number B 07-1999.

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Date of creation: 1999
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Handle: RePEc:zbw:zeiwps:b071999

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Related research

Keywords: cointegration; convergence; economic growth; efficiency; productivity; technological diffusion; unit root;

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  1. Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  2. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  3. Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
  4. Cornwell, Christopher Mark & Wächter, Jens-Uwe, 1999. "Productivity convergence and economic growth: A frontier production function approach," ZEI Working Papers B 06-1999, ZEI - Center for European Integration Studies, University of Bonn.
  5. F. J.M. Meyer-zu-Schlochtern, 1988. "An International Sectoral Data Base for Thirteen OECD Countries," OECD Economics Department Working Papers 57, OECD Publishing.
  6. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-38, December.
  7. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
  8. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
  9. Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers.
  10. Bernard, A.B. & Jones, C.I., 1993. "Productivity Across Industries and Countries: Time Series Theory and Evidence," Working papers 93-17, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
  12. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, October.
  13. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
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