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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.

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  • 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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    References listed on IDEAS

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    1. Lee, Junsoo & Strazicich, Mark C, 2001. " Break Point Estimation and Spurious Rejections with Endogenous Unit Root Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(5), pages 535-558, December.
    2. Junsoo Lee & Mark C. Strazicich, 2013. "Minimum LM unit root test with one structural break," Economics Bulletin, AccessEcon, vol. 33(4), pages 2483-2492.
    3. Strazicich, Mark C. & Lee, Junsoo & Day, Edward, 2004. "Are incomes converging among OECD countries? Time series evidence with two structural breaks," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 131-145, March.
    4. Nunes, Luis C & Newbold, Paul & Kuan, Chung-Ming, 1997. "Testing for Unit Roots with Breaks: Evidence on the Great Crash and the Unit Root Hypothesis Reconsidered," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(4), pages 435-448, November.
    5. Junsoo Lee & Mark C. Strazicich, 2003. "Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1082-1089, November.
    6. Li, Qing & Papell, David, 1999. "Convergence of international output Time series evidence for 16 OECD countries," International Review of Economics & Finance, Elsevier, vol. 8(3), pages 267-280, September.
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    Cited by:

    1. repec:eco:journ2:2019-02-35 is not listed on IDEAS
    2. Jan Bentzen, 2015. "Comparing data sources of real GDP in purchasing power parities," Applied Economics Letters, Taylor & Francis Journals, vol. 22(16), pages 1303-1308, November.
    3. 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.
    4. Alan King & Carlyn Ramlogan-Dobson, 2016. "Is there club convergence in Latin America?," Empirical Economics, Springer, vol. 51(3), pages 1011-1031, November.
    5. 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.
    6. Atanu Ghoshray & Faiza Khan, 2015. "New empirical evidence on income convergence," Empirical Economics, Springer, vol. 49(1), pages 343-361, August.
    7. Johnson, Paul & Papageorgiou, Chris, 2018. "What Remains of Cross-Country Convergence?," MPRA Paper 89355, University Library of Munich, Germany.
    8. 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, vol. 0(3), pages 22-38, October.
    9. José Noguera-Santaella, 2017. "Is Sub-Saharan Africa catching up?," Empirical Economics, Springer, vol. 52(2), pages 555-575, March.
    10. repec:eco:journ1:2018-02-42 is not listed on IDEAS
    11. repec:spr:jknowl:v:8:y:2017:i:1:d:10.1007_s13132-015-0265-4 is not listed on IDEAS
    12. repec:kap:ecopln:v:51:y:2018:i:3:d:10.1007_s10644-017-9214-5 is not listed on IDEAS
    13. 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.
    14. 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.
    15. repec:eee:intfin:v:55:y:2018:i:c:p:13-28 is not listed on IDEAS
    16. 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.
    17. King, Alan & Ramlogan-Dobson, Carlyn, 2015. "International income convergence: Is Latin America actually different?," Economic Modelling, Elsevier, vol. 49(C), pages 212-222.
    18. 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 - Leibniz Information Centre for Economics, pages 642-656..
    19. King, Alan & Ramlogan-Dobson, Carlyn, 2015. "Is Africa Actually Developing?," World Development, Elsevier, vol. 66(C), pages 598-613.

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