Revisiting the Relationship between Î² and Ïƒ Convergence
Faiza Azhar KHAN ()
Pakistan Journal of Applied Economics, 2016, vol. 26, issue 1, 43-52
The paper questions the widely held assumptions about the relationship between absolute Î²-convergence and Ïƒ-convergence in the existing literature which states that Î²-convergence is a necessary condition for Ïƒ-convergence. The study utilizes the data of 136 countries for the period 1950 to 2008. The non-linear least squares estimations of the Î²-convergence regression, using both the cross-section and panel data, have confirmed no absolute convergence for the world sample. The Ïƒ-convergence has been studied using its two widely used measures, namely, coefficient of variation of income and standard deviation of log income. The results reveal that there is an evidence of Ïƒ-convergence using the former measure but not using the latter measure. These findings on Î² and Ïƒ convergence asserts that the relationship between Î² and Ïƒ convergence depends on the particular measure of Ïƒ-convergence being used, and hence, cannot be generalized. Specifically, contrary to the theoretical view of relationship between Î² and Ïƒ convergence, there is an evidence of Ïƒ-convergence without prevalence of Î²-convergence among the world countries.
Keywords: Î²; and; Ïƒ; Convergence (search for similar items in EconPapers)
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