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Convergence and Long-Run Uncertainty

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  • Pablo M. Pincheira

    () (central Bank of Chile)

Abstract

In this paper the neoclassical convergence hypothesis is tested for the thirteen of Chile using cross-section techniques and the times-series based test proposed by Bertrand, A. and S. Durlauf, 1995, “Convergence in international Output”, Journal of Applied Econometrics 10 (2), pp.97-108. Cross-section analysis in combination with Bayesian Modeling Averaging strategy supports the convergence hypothesis, despite of some instability detected in the estimated speed of convergence. When applying time-series based tests, the no convergence null hypothesis cannot be rejected at the usual significance levels. When clustering the Chilean regions into three different groups, however, evidence of cointegration within these groups is found, indicating that the regional growth progress in Chile is driven by a lower number of common trends.

Suggested Citation

  • Pablo M. Pincheira, 2014. "Convergence and Long-Run Uncertainty," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 29(1), pages 17-52, April.
  • Handle: RePEc:ila:anaeco:v:29:y:2014:i:1:p:17-52
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    References listed on IDEAS

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    2. Durlauf, Steven N & Johnson, Paul A, 1995. "Multiple Regimes and Cross-Country Growth Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 365-384, Oct.-Dec..
    3. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    4. Perron, Pierre, 1988. "Trends and random walks in macroeconomic time series : Further evidence from a new approach," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 297-332.
    5. Roberto Duncan & Rodrigo Fuentes, 2006. "Regional Convergence in Chile: New Tests, Old Results," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 81-112.
    6. Bernard, Andrew B & Durlauf, Steven N, 1995. "Convergence in International Output," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-108, April-Jun.
    7. Rómulo A. Chumacero, 2002. "Is There Enough Evidence Against Absolute Convergence?," Working Papers Central Bank of Chile 176, Central Bank of Chile.
    8. Carlos Oyarzún & Iván Araya, 2001. "Long run dynamics of regional growth in Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 28(1 Year 20), pages 69-78, June.
    9. Roberto Duncan & J. Rodrigo Fuentes, 2005. "Convergencia Regional en Chile: Nuevos Tests, Viejos Resultados," Working Papers Central Bank of Chile 313, Central Bank of Chile.
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    Citations

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    Cited by:

    1. Jorge Dresdner & Carlos Sanhueza, 2009. "NOTA TECNICA: Estimación de Series de Salarios Regionales en Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 36(2 Year 20), pages 243-261, December.
    2. Bentancor, A. & Modrego, F. & Berdegué, J., 2008. "Crecimiento y Distribución del Ingreso como Determinantes de la Reducción de la Pobreza en Comunas Rurales de Chile," Working papers 014, Rimisp Latin American Center for Rural Development.

    More about this item

    Keywords

    Convergence Hypothesis; economic growth; Bayesian model averaging; cointegration; Chile;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • 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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