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On the Power of Absolute Convergence Tests

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  • Chumacero Rómulo A.

    (Central Bank of Chile and University of Chile)

Abstract

This paper analyzes whether or not the econometric methods usually applied to test for absolute convergence have provided this hypothesis a "fair" chance. I show that traditional (absolute and conditional) convergence tests are not consistent with even the simplest model that displays convergence. Furthermore, claims of divergence on the grounds of bimodalities in the distribution of GDP per capita can be made consistent with models in which neither divergence nor twin peaks are present in the long run.

Suggested Citation

  • Chumacero Rómulo A., 2006. "On the Power of Absolute Convergence Tests," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 10(2), pages 1-25, May.
    • Handle: RePEc:bpj:sndecm:v:10:y:2006:i:2:n:5
    DOI: 10.2202/1558-3708.1237
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    Cited by:

    1. Rómulo Chumacero, 2002. "Reviewing the Evidence against Absolute Convergence," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.),Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 4, pages 115-134, Central Bank of Chile.
    2. Rómulo A. Chumacero, 2002. "Is There Enough Evidence Against Absolute Convergence?," Working Papers Central Bank of Chile 176, Central Bank of Chile.
    3. Mark J.Holmes, 2006. "Regime-Dependent output convergence in Latin America," Estudios de Economia, University of Chile, Department of Economics, vol. 33(1 Year 20), pages 65-81, June.

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