Nonlinear Models of Convergence

Konstantin Gluschenko

MPRA Paper from University Library of Munich, Germany

Abstract: A sufficient issue in studies of economic development is whether economies (countries, regions of a country, etc.) converge to one another in terms of per capita income. In this paper, nonlinear asymptotically subsiding trends of income gap in a pair of economies model the convergence process. A few specific forms of such trends are proposed: log-exponential trend, exponential trend, and fractional trend. A pair of economies is deemed converging if time series of their income gap is stationary about any of these trends. To test for stationarity, standard unit root tests are applied with non-standard test statistics that are estimated for each kind of the trends.

Keywords: income convergence; time series econometrics; nonlinear time-Series model; unit root (search for similar items in EconPapers)
JEL-codes: C32 C51 (search for similar items in EconPapers)
Date: 2020-03-28
New Economics Papers: this item is included in nep-ecm and nep-ets
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Citations: View citations in EconPapers (2)

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