NOMINAL AND REAL STOCHASTIC CONVERGENCE OF THE BRICS ECONOMIES

Pin You (), Yunpeng Sun () and Lei An ()
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Pin You: Department of Econometrics and Statistics, School of Economics, Nankai University, Tianjin 300071, China
Yunpeng Sun: Subject Group of Economics and Finance, Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, Hampshire, United Kingdom
Lei An: Bucharest University of Economic Studies, Faculty of Finance and Banking, Bucharest, ROMANIA

Review of Economic and Business Studies, 2017, issue 20, 9-28

Abstract: This study sheds light on the real and nominal economic convergence and the time-varying convergence speed of Brazil, Russia, India, China, and South Africa (BRICS). This paper also employs panel data models and a Malmquist index to analyze the mechanism of real economic convergence. The study finds evidence of real convergence in monthly growth of output (industrial production) of the BRICS economies, where the speed of convergence increases in the post-crisis period. Economic convergence is also witnessed by physical capital per capita and total factor productivity (TFP). However, lack of monetary convergence is apparent in nominal interest rate spreads, monetary aggregate M2, and the price level. Although the BRICS economies are converging to a fully-fledged economic and trade union, such convergence is not echoed by their monetary aggregates and price levels. Finally, the evidence of technological progress is expected to promote labor productivity and to further accelerate economic convergence.

Keywords: panel data; BRICS; Kernel Density Estimator; Malmquist Index; Nominal and Real Convergence; Panel Unit Root Tests (search for similar items in EconPapers)
JEL-codes: F15 F36 F63 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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