Convergence and Growth: Revisited

Jose Miguel Benavente, Emerson Melo and Sandra Quijada

Working Papers from University of Chile, Department of Economics

Abstract: The present paper builds on the work of Caselli, Esquivel and Lefort (1996) where growth equations are estimated using the Generalized Moment Method. It is shown here that the results of those authors are biased due to a methodological problem. The convergence rate of around 12% that they report is overestimated and the real rate is in fact around 3 or 4 %; in line with earlier studies. The results found are robust to various new dynamic panel estimation techniques, although the significant differences are indicated when making inferences if variance corrections are not considered for estimators that use the Generalized Moment Method.

Keywords: Convergence; GMM; Kiviet Correction. (search for similar items in EconPapers)
Date: 2006-10
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