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An Alternative Interpretation of Conditional Convergence Results


  • Cho, Dongchul


This paper focuses on the endogeneity of the investment-to-GDP ratio and the population growth rate, two of the most frequently used control variables in cross-country growth regressions for the convergence test. The Summers-Heston data (1988) show that the former rises and the latter declines with income growth. When the indirect, yet endogenous, effects through these control variables are taken into account and simultaneity bias is corrected, relatively high income countries appear to grow faster than low income countries. This interpretation sharply contrasts with the conditional convergence interpretation based on the assumption of exogenous control variables. Copyright 1996 by Ohio State University Press.

Suggested Citation

  • Cho, Dongchul, 1996. "An Alternative Interpretation of Conditional Convergence Results," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 669-681, November.
  • Handle: RePEc:mcb:jmoncb:v:28:y:1996:i:4:p:669-81

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    References listed on IDEAS

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    1. Cem Ertur & Thiaw Kalidou, 2005. "Growth and Spatial Dependence - The Mankiw, Romer and Weil model revisited," ERSA conference papers ersa05p660, European Regional Science Association.
    2. Rómulo A. Chumacero, 2002. "Is There Enough Evidence Against Absolute Convergence?," Working Papers Central Bank of Chile 176, Central Bank of Chile.
    3. 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.
    4. Larry E. Jones & Rodolfo E. Manuelli, 2001. "Endogenous Policy Choice: The Case of Pollution and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 369-405, July.
    5. Guyslain K. Ngeleza & Raymond J.G.M. Florax & William A. Masters, 2006. "Geographic And Institutional Determinants Of Real Income:A Spatio-Temporal Simultaneous Equation Approach," Working Papers 06-15, Purdue University, College of Agriculture, Department of Agricultural Economics.
    6. 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.
    7. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308 Elsevier.
    8. Hirtle, Beverly, 2009. "Credit derivatives and bank credit supply," Journal of Financial Intermediation, Elsevier, vol. 18(2), pages 125-150, April.
    9. NGELEZA, Guyslain K. & FLORAX, Raymond J.G.M. & MASTERS, William A, 2011. "Spatial Inequality: Overcoming Neighborhood Effects In Africa," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(2).
    10. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308 Elsevier.
    11. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2005. "A Meta-Analysis of Beta-Convergence: The Legendary Two-Percent," Tinbergen Institute Discussion Papers 05-001/3, Tinbergen Institute.
    12. María Jesús Freire-Serén, 2001. "Human capital accumulation and economic growth," Investigaciones Economicas, Fundación SEPI, vol. 25(3), pages 585-602, September.
    13. Stephen Dobson & Carlyn Ramlogan & Eric Strobl, 2006. "Why Do Rates Of Β-Convergence Differ? A Meta-Regression Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 153-173, May.
    14. Yudon, Y. & Weeks, M., 2000. "Provincial Income Convergence in China, 1953-1997: a Panel Data Approach," Cambridge Working Papers in Economics 0010, Faculty of Economics, University of Cambridge.
    15. Celal Kucuker, 2003. "Türkiye Ýktisat Kongresi Büyüme Stratejileri Çalýþma Grubu," Working Papers 2003/5, Turkish Economic Association.

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