Persistence in Convergence

Thanasis Stengos and Ege Yazgan ()

No 1105, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: In this paper, we examine the convergence hypothesis using a long memory framework that allows for structural breaks and the non reliance on a benchmark country. We find that even though the long memory framework of analysis is much richer than the simple I(1)/I(0) alternative, a simple absolute divergence and rapid convergence dichotomy produced by the latter is sufficient to capture the behavior of the gaps in per capita GDP levels and growth rates results respectively. This is in contrast to the findings of Dufrénot, Mignon and Naccache (2009) who found strong evidence of long memory for output gaps. The speed of convergence captured by the estimated long memory parameter d, is explained by differences in physical and human capital as well as fiscal discipline characteristics of economic policies pursued by different countries.

Keywords: Growth Convergence; Long Memory (search for similar items in EconPapers)
JEL-codes: C32 O47 (search for similar items in EconPapers)
Pages: 20
Date: 2011
New Economics Papers: this item is included in nep-ets
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: PERSISTENCE IN CONVERGENCE (2014)
Working Paper: Persistence in Convergence (2011)
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