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Catching-up process in the transition countries

Omid Ranjbar (), Tsangyao Chang (), Chien-Chiang Lee () and Zahra Mila Elmi ()
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Omid Ranjbar: Allameh Tabataba’i University
Zahra Mila Elmi: University of Mazandaran

Economic Change and Restructuring, 2018, vol. 51, issue 3, 249-278

Abstract: Abstract This paper revisits the catching-up hypothesis among the 29 transition countries using the time series approach to investigate income convergence. In this study, we propose a model which specifies a trend function incorporating both sharp and smooth breaks using dummy variables and Fourier functions, respectively. Our empirical results indicate that two convergence clubs are forming among the transition countries and one club is among the rich and the other club is among the poor countries, where most middle income countries will disappear and move into one of the two clubs. Also, our results indicate that the 1980s was an ominous decade for growth in the transition countries with income in most diverging from the USA. With recovery in the 1990s, we find that in the 2000s income per capita in most of these countries was catching up toward the USA.

Keywords: Transition countries; Convergence; Smooth breaks; Sharp breaks; Distribution dynamics (search for similar items in EconPapers)
JEL-codes: C32 O41 (search for similar items in EconPapers)
Date: 2018
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