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Convergence Equations and Income Dynamics: The Sources of OECD Convergence, 1970–1995
Author(s) -
De la fuente Angel
Publication year - 2003
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1046/j.0013-0427.2003.00001.x
Subject(s) - convergence (economics) , economics , econometrics , per capita income , sample (material) , simultaneous equations model , distribution (mathematics) , mathematics , macroeconomics , mathematical analysis , chemistry , demography , chromatography , sociology
This paper illustrates how convergence equations can be used to analyse the dynamics of the income distribution using a simple extension of standard techniques. Using data for a sample of OECD countries, I estimate an equation that relates growth in income per capita to the standard growth theory variables, government size and labour market performance indicators. The estimated model and the underlying data are then used in a convergence accounting exercise that yields quantitative estimates of the contribution of each of these variables to the relative growth performance of each country and to observed convergence in the sample.