A simple proposal to improve the power of income convergence tests

Artur Silva Lopes ()

Economics Letters, 2016, vol. 138, issue C, 92-95

Abstract: I make a simple proposal to replace trend stationarity with level stationarity as the alternative hypothesis in unit root tests for income convergence. This replacement improves the power of the tests and is supported by a clear and well known definition of convergence. A small Monte Carlo study and an empirical example illustrate this improvement.

Keywords: Economic growth; Income convergence; Unit root tests (search for similar items in EconPapers)
JEL-codes: C22 F43 O47 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:138:y:2016:i:c:p:92-95

DOI: 10.1016/j.econlet.2015.11.041

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