Most likely you go your way (and I'll go mine): non-convergent incomes with a new DF-Fourier test

Artur Silva Lopes ()

MPRA Paper from University Library of Munich, Germany

Abstract: Motivated by the purpose to assess the income convergence hypothesis, a simple new Fourier-type unit root test of the Dickey-Fuller family is introduced and analysed. In spite of a few shortcomings that it shares with rival tests, the proposed test generally improves upon them in terms of power performance in small samples. The empirical results that it produces for a recent and updated sample of data for 25 countries clearly contrast with previous evidence produced by the Fourier approach and, more generally, they also contradict a recent wave of optimism concerning income convergence, as they are mostly unfavourable to it.

Keywords: income convergence; unit root tests; structural breaks (search for similar items in EconPapers)
JEL-codes: C22 F43 O47 (search for similar items in EconPapers)
Date: 2021-03-19, Revised 2021-03-19
New Economics Papers: this item is included in nep-ecm and nep-ets
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:107676

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