Convergence and Long-Run Uncertainty

Pablo Pincheira

Revista de Analisis Economico – Economic Analysis Review, 2014, vol. 29, issue 1, 17-52

Abstract: In this paper the neoclassical convergence hypothesis is tested for the thirteen of Chile using cross-section techniques and the times-series based test proposed by Bertrand, A. and S. Durlauf, 1995, "Convergence in international Output", Journal of Applied Econometrics 10 (2), pp.97-108. Cross-section analysis in combination with Bayesian Modeling Averaging strategy supports the convergence hypothesis, despite of some instability detected in the estimated speed of convergence. When applying time-series based tests, the no convergence null hypothesis cannot be rejected at the usual significance levels. When clustering the Chilean regions into three different groups, however, evidence of cointegration within these groups is found, indicating that the regional growth progress in Chile is driven by a lower number of common trends.

Keywords: Convergence Hypothesis; economic growth; Bayesian model averaging; cointegration; Chile (search for similar items in EconPapers)
JEL-codes: C11 C32 O47 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Convergence and Long Run Uncertainty (2006)
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