Peaks vs. Components

Sebastian Vollmer, Hajo Holzmann and Florian Schwaiger

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

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.

Keywords: twin peaks; economic growth; convergence (search for similar items in EconPapers)
JEL-codes: C12 F01 O11 O47 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-07
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (2)

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Journal Article: Peak vs Components (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:han:dpaper:dp-452

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