Income Thresholds And Growth Convergence: A Panel Data Approach
This paper applies a dynamic panel model to explore whether the low-income countries 'catch up' with the rich ones by examining the threshold effects of per capita income on the convergence behavior of growth rates. Empirical evidence from 121 Penn World Table economies and 48 US states indicates that income levels have substantial impacts on the convergence behavior. First, convergence is insignificantly found in the lowest-income regimes, which is interpreted that these poor countries persist at their income levels, which cause possible income barriers-to-growth. That is, the poor countries may not be able to catch up with the rich ones easily, unless an income threshold is overcome. Second, convergence is significantly found beyond the lowest-income regime, implying that the low-income countries catch up with the rich. We conclude that when a certain income threshold is overcome, the poor countries catch up with the rich ones; hence a subsidiary income policy can be helpful. Copyright Blackwell Publishing Ltd and The University of Manchester, 2006.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 74 (2006)
Issue (Month): 2 (03)
|Contact details of provider:|| Postal: Manchester M13 9PL|
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1463-6786
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=1463-6786|