Empirics for economic growth and convergence

Danny Quah

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The convergence hypothesis has generated a huge empirical literature: this paper critically reviews some of the earlier key ndings, claries their implications, and relates them to more recent results. Particular atten- tion is devoted to interpreting convergence empirics. The main ndings are: (1) The much-heralded uniform 2% rate of convergence could arise for reasons unrelated to the dynamics of economic growth. (2) Usual empirical analyses|cross-section (conditional) convergence regressions, time series modelling, panel data analysis|can be misleading for under- standing convergence; a model of polarization in economic growth clarifies those difficultles. (3) The data, more revealingly modelled, show persis- tence and immobility across countries: some evidence supports Baumol's idea of \convergence clubs"; some evidence shows the poor getting poorer, and the rich richer, with the middle class vanishing. (4) Convergence, un- ambiguous up to sampling error, is observed across US states.

Keywords: evolving distributions; Galton's fallacy; polarization; regional dynam- ics; stochastic kernel; unit root (search for similar items in EconPapers)
JEL-codes: C21 C22 C23 O41 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1995-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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