Per Capita Income Convergence and Divergence of Selected OECD Countries to and from the US: A Reappraisal for the period 1900-2018

László Kónya

Applied Econometrics and International Development, 2023, vol. 23, issue 1, 33-56

Abstract: This paper revisits per capita income convergence (divergence) of 19 Organisation for Economic Co-operation and Development countries to (from) the United States between 1900 and 2018 by testing for stochastic convergence and time-series ?-convergence, and a country is meant to converge in the sense of catching-up if it is found to converge in both ways. Given the possibility of structural breaks over the long sample period, first each log differential series is subjected to a multiple breakpoint test and then stochastic convergence is tested with modified SURADF tests and country specific bootstrap critical values on the detrended series. When stochastic convergence is detected, time-series ?-convergence is looked for by comparing the signs of the log differentials to the signs of the slopes of their revealed trends. The results suggest that every country converged stochastically to the United States. However, none of them enjoyed uninterrupted time-series ?-convergence or divergence, they were all catching-up, falling behind or pulling ahead during various periods of time.

Keywords: OECD; Convergence; Income; Structural break; Panel unit root test; Bootstrapping (search for similar items in EconPapers)
JEL-codes: C22 C32 C52 E23 (search for similar items in EconPapers)
Date: 2023
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