CONVERGENCE OF THE G-7: A COINTEGRATION APPROACH

Dave D. Weatherspoon, James L. Seale () and Charles B Moss ()

No 11675, Staff Papers from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: Income convergence among the G-7 countries was demonstrated using Theil's inequality (entropy) index. G-7 convergence was also found for three potential factors of influence on economic growth: government expenditure, investment expenditure, and industrial employment. Pairwise cointegration tests indicated that income inequality was cointegrated with the other three inequality measures for the time period of 1950-88. Finally, Johansen's I(2) multi-cointegration tests indicated that three of the four inequality measures (i.e. income, investment expenditure, and industrial employment) were cointegrated suggesting that there exists a long-run equilibrium between the inequality in income, investment expenditure, and industrial employment.

Keywords: Agricultural and Food Policy (search for similar items in EconPapers)
Date: Written

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