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A contribution to the empirics of convergence in real GDP growth: the role of financial crises and exchange-rate regimes

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  • Amalia Morales-Zumaquero
  • Simón Sosvilla-Rivero

Abstract

This paper investigates the convergence in real gross domestic product growth focusing on the impact of financial crises (i.e. banking crises, currency crises and debt crises) and nominal exchange-rate regimes (i.e. fixed, intermediate and flexible) on convergence. To that end, we compute four convergence indicators ( σ -convergence, γ -convergence, absolute β -convergence and conditional β -convergence) for 163 countries classified into four income groups during the period 1970--2011. The results suggest that (i) there is evidence in favour of σ -convergence and γ -convergence only for high-income countries; (ii) absolute and conditional β -convergence are present in each of the four income groups of the countries under study; (iii) exchange-rate regimes seem to play some role in upper-middle and lower-middle-income countries; and (iv) financial crises have a negative and significant impact on GDP growth independently of the income level of the countries.

Suggested Citation

  • Amalia Morales-Zumaquero & Simón Sosvilla-Rivero, 2016. "A contribution to the empirics of convergence in real GDP growth: the role of financial crises and exchange-rate regimes," Applied Economics, Taylor & Francis Journals, vol. 48(23), pages 2156-2169, May.
  • Handle: RePEc:taf:applec:v:48:y:2016:i:23:p:2156-2169
    DOI: 10.1080/00036846.2015.1114581
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    2. Desli, Evangelia & Gkoulgkoutsika, Alexandra, 2021. "Economic convergence among the world’s top-income economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 841-853.
    3. repec:pra:mprapa:117955 is not listed on IDEAS

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    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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