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THE CONVERGENCE HYPOTHESIS FOR OECD COUNTRIES RECONSIDERED: PANEL DATA EVIDENCE WITH MULTIPLE BREAKS, 1870–2003 *
Author(s) -
ROMEROÁVILA DIEGO
Publication year - 2009
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2009.02109.x
Subject(s) - convergence (economics) , economics , panel data , econometrics , per capita , per capita income , macroeconomics , demography , sociology , population
In this paper we investigate the existence of stochastic convergence of per capita real output in 19 OECD countries over 1870–2003. For that purpose, we employ panel techniques which incorporate an unknown number of structural breaks along with cross‐dependence. Overall, our analysis provides strong evidence of stochastic convergence over the 20th century. In addition, the examination of time‐series β ‐convergence within the different regimes identified renders evidence supporting catching‐up for 16 countries. This implies that, despite a narrowing of the income gap, the convergence process has yet to be completed. Evidence of long‐run convergence is further provided for Finland, France and the USA.