Testing Convergence in Economic Growth for OECD Countries

S. Nahar and Brett Inder

No 14/98, Monash Econometrics and Business Statistics Working Papers from Monash University, Department of Econometrics and Business Statistics

Abstract: In this paper we propose a new test procedure with more general steady state information to test the convergence hypothesis for a specific economy. We consider a model where demeaned per capita output of an economy is a function of time trend and then set the convergence hypothesis as negative average slope of that model. Applying the new procedure to 22 OECD countries we find strong evidence of convergence for 20 countries towards their average level. This study also points out why using standard unit root tests with Bernard and Durlauf's (1995) definition of convergence is inappropriate.

Keywords: ECONOMIC GROWTH; ECONOMIC MODELS; TESTS (search for similar items in EconPapers)
JEL-codes: C50 C52 F40 F43 (search for similar items in EconPapers)
Pages: 31 pages
Date: 1998
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Journal Article: Testing convergence in economic growth for OECD countries (2002)
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