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A note on the use of quantile regression in beta convergence analysis

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  • Laurini, Márcio P.

Abstract

We discuss how to interpret conflicting results obtained by the use of quantile regression methods in growth regression tests of β-convergence hypothesis and the results obtained by nonparametric methods. We show that the assumption of linearity may cause the non-rejection of the β-convergence hypothesis by quantile regression. We also show that using a nonparametric form of quantile regression, we can reject the hypothesis of β-convergence and confirm the results of divergence and formation of convergence clubs. We illustrate the discussion by using the conflicting results on convergence found in the dataset of per-capita income of Brazilian municipalities between 1970 and 1996.
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  • Laurini, Márcio P., 2007. "A note on the use of quantile regression in beta convergence analysis," Insper Working Papers wpe_95, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
  • Handle: RePEc:ibm:ibmecp:wpe_95
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Raul A. Barreto & Anthony W. Hughes, 2004. "Under Performers and Over Achievers: A Quantile Regression Analysis of Growth," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 17-35, March.
    3. Andrade, Eduardo & Laurini, Marcio & Madalozzo, Regina & Valls Pereira, Pedro L., 2004. "Convergence clubs among Brazilian municipalities," Economics Letters, Elsevier, vol. 83(2), pages 179-184, May.
    4. Bernard, Andrew B. & Durlauf, Steven N., 1996. "Interpreting tests of the convergence hypothesis," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 161-173.
    5. Marcio Laurini & Eduardo Andrade & Pedro L. Valls Pereira, 2005. "Income convergence clubs for Brazilian Municipalities: a non-parametric analysis," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2099-2118.
    6. Mello, Marcelo & Perrelli, Roberto, 2003. "Growth equations: a quantile regression exploration," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(4), pages 643-667.
    7. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
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    9. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
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    11. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-2132, December.
    12. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    13. Andrade, Eduardo & Laurini, Márcio & Madalozzo, Regina & Pedro L. Valls Pereira, 2002. "Testing Convergence Across Municipalities in Brazil Using Quantile Regression," Insper Working Papers wpe_25, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
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    Cited by:

    1. Takahashi, Kazushi, 2013. "Pro-poor growth or poverty trap? : estimating intergenerational income mobility in rural Philippines," IDE Discussion Papers 382, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Túlio Cravo & Guilherme Resende, 2013. "Economic growth in Brazil: a spatial filtering approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(2), pages 555-575, April.
    3. Marta Simões & João Sousa Andrade & Adelaide Duarte, 2012. "Convergence and Growth: Portugal in the EU 1986-2010," GEMF Working Papers 2012-13, GEMF, Faculty of Economics, University of Coimbra.
    4. João Sousa Andrade & Adelaide Duarte & Marta Simões, 2014. "A Quantile Regression Analysis of Growth and Convergence in the EU: Potential Implications for Portugal," Notas Económicas, Faculty of Economics, University of Coimbra, issue 39, pages 48-72, June.

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    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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