Testing the Convergence Hypothesis

Frank Lichtenberg

The Review of Economics and Statistics, 1994, vol. 76, issue 3, 576-79

Abstract: The authors show that, contrary to the beliefs of some previous analysts of international economic growth, the hypotheses of convergence and of mean-reversion are not equivalent. Under some assumptions, the rate of convergence is independent of the degree of mean-reversion; under other assumptions, mean-reversion is a necessary, but not a sufficient, condition for convergence. The authors show the relationship between the convergence test and the mean-reversion test and provide an empirical example in which the null hypothesis of no mean-reversion is rejected but the null hypothesis of no convergence is not rejected. Copyright 1994 by MIT Press.

Date: 1994
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