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Time-series tests of income convergence with two structural breaks: evidence from 29 countries

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  • John Dawson
  • Mark Strazicich

Abstract

This article uses data on real per capita incomes from 1900 to 2001 to test for stochastic convergence in a diverse group of 29 countries. We utilize LM unit root tests to endogenously determine the number and location of structural breaks for each country. These tests avoid spurious rejections that can occur in Dickey-Fuller-type endogenous break tests used in many previous studies. We find significant evidence that incomes are stochastically converging in 23 of the countries, with World War II most often identified as the time period of structural breaks.

Suggested Citation

  • John Dawson & Mark Strazicich, 2010. "Time-series tests of income convergence with two structural breaks: evidence from 29 countries," Applied Economics Letters, Taylor & Francis Journals, vol. 17(9), pages 909-912.
  • Handle: RePEc:taf:apeclt:v:17:y:2010:i:9:p:909-912 DOI: 10.1080/13504850802584807
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    1. Ivo Welch & Amit Goyal, 2008. "A Comprehensive Look at The Empirical Performance of Equity Premium Prediction," Review of Financial Studies, Society for Financial Studies, pages 1455-1508.
    2. Pearce, Douglas K, 1984. "An Empirical Analysis of Expected Stock Price Movements," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(3), pages 317-327, August.
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    1. Tunali, Çiǧdem Börke & Yilanci, Veli, 2010. "Are per capita incomes of MENA countries converging or diverging?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(21), pages 4855-4862.
    2. Alan King & Carlyn Ramlogan-Dobson, 2016. "Is there club convergence in Latin America?," Empirical Economics, Springer, pages 1011-1031.
    3. King Alan & Ramlogan-Dobson Carlyn, 2014. "Are income differences within the OECD diminishing? Evidence from Fourier unit root tests," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(2), pages 1-15, April.
    4. Caviglia-Harris, Jill & Sills, Erin & Bell, Andrew & Harris, Daniel & Mullan, Katrina & Roberts, Dar, 2016. "Busting the Boom–Bust Pattern of Development in the Brazilian Amazon," World Development, Elsevier, vol. 79(C), pages 82-96.
    5. Atanu Ghoshray & Faiza Khan, 2015. "New empirical evidence on income convergence," Empirical Economics, Springer, pages 343-361.
    6. Ceylan, Reşat & Abiyev, Vasif, 2016. "An examination of convergence hypothesis for EU-15 countries," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 96-105.
    7. Solarin, Sakiru Adebola & Lean, Hooi Hooi, 2016. "Are fluctuations in oil consumption permanent or transitory? Evidence from linear and nonlinear unit root tests," Energy Policy, Elsevier, vol. 88(C), pages 262-270.
    8. King, Alan & Ramlogan-Dobson, Carlyn, 2015. "International income convergence: Is Latin America actually different?," Economic Modelling, Elsevier, vol. 49(C), pages 212-222.
    9. Zarembova, Andrea & Lyocsa, Stefan & Baumöhl, Eduard, 2012. "The Real Convergence of CEE Countries: A Study of Real GDP per capita," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 642-656..
    10. Burcu Ozcan, 2014. "Does Income Converge among EU Member Countries following the Post-War Period? Evidence from the PANKPSS Test," Journal for Economic Forecasting, Institute for Economic Forecasting, pages 22-38.
    11. King, Alan & Ramlogan-Dobson, Carlyn, 2015. "Is Africa Actually Developing?," World Development, Elsevier, vol. 66(C), pages 598-613.
    12. José Noguera-Santaella, 2017. "Is Sub-Saharan Africa catching up?," Empirical Economics, Springer, pages 555-575.
    13. repec:spr:jknowl:v:8:y:2017:i:1:d:10.1007_s13132-015-0265-4 is not listed on IDEAS

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