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Peaks vs. Components

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  • Vollmer, Sebastian
  • Holzmann, Hajo
  • Schwaiger, Florian

Abstract

We analyze the cross-national distribution of GDP per capita and its evolution from 1970 to 2003. We argue that peaks are not a suitable measure for distinct growth regimes, because the number of peaks is not invariant under strictly monotonic transformations of the data (e.g. original vs. log scale). Instead, we model the distribution as a finite mixture, and determine its number of components (and hence of distinct growth regimes) from the data by rigorous statistical testing. We find that the distribution appears to have only two components in 1970-1975, but consists of three components from 1976 onwards. The level of GDP per capita stagnated in the poorest component, and the richest component grew much faster than the medium component. These findings empirically confirm the predictions of the unified growth theory.

Suggested Citation

  • Vollmer, Sebastian & Holzmann, Hajo & Schwaiger, Florian, 2010. "Peaks vs. Components," Hannover Economic Papers (HEP) dp-452, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  • Handle: RePEc:han:dpaper:dp-452
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    References listed on IDEAS

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    Cited by:

    1. Arunachalam, Raj & Shenoy, Ajay, 2017. "Poverty traps, convergence, and the dynamics of household income," Journal of Development Economics, Elsevier, vol. 126(C), pages 215-230.
    2. Sebastian Vollmer & Hajo Holzmann & Florian Ketterer & Stephan Klasen, 2013. "Distribution dynamics of regional GDP per employee in unified Germany," Empirical Economics, Springer, vol. 44(2), pages 491-509, April.
    3. Holger Strulik & Sebastian Vollmer, 2015. "The fertility transition around the world," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(1), pages 31-44, January.

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    More about this item

    Keywords

    twin peaks; economic growth; convergence;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • F01 - International Economics - - General - - - Global Outlook

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