##
**Interpreting tests of the convergence hypothesis.**
*(English)*
Zbl 0842.62094

Summary: This paper provides a framework for understanding the cross-section and time series approaches which have been used to test the convergence hypothesis. First, we present two definitions of convergence which capture the implications of the neo-classical growth model for the relationship between current and future cross-country output differences. Second, we identify how the cross-section and time series approaches relate to these definitions. Cross-section tests are shown to be associated with a weaker notion of convergence than time series tests. Third, we show how these alternative approaches make different assumptions on whether the data are well characterized by a limiting distribution. As a result, the choice of an appropriate testing framework is shown to depend on both the specific null and alternative hypotheses under consideration as well as on the initial conditions characterizing the data being studied.

### Keywords:

unit roots; convergence hypothesis; neo-classical growth model; cross-country output differences; time series tests; limiting distribution
PDF
BibTeX
XML
Cite

\textit{A. B. Bernard} and \textit{S. N. Durlauf}, J. Econom. 71, No. 1--2, 161--173 (1996; Zbl 0842.62094)

### References:

[1] | Azariadis, C.; Drazen, A.: Threshold externalities in economic development. Quarterly journal of economics 105, 501-526 (1990) |

[2] | Barro, R. J.: Economic growth in a cross-section of countries. Quarterly journal of economics 106, 407-445 (1991) |

[3] | Barro, R. J.; Sala-I-Martin, X.: Convergence across states and regions. Brookings papers on economic activity 1, 107-158 (1991) |

[4] | Barro, R. J.; Sala-I-Martin, X.: Convergence. Journal of political economy 100, 223-251 (1992) |

[5] | Baumol, W. J.: Productivity growth, convergence and welfare: what the long run data show. American economic review 76, 1072-1085 (1986) |

[6] | Bernard, A. B.: Empirical implications of the convergence hypothesis. Working paper (1992) |

[7] | Bernard, A. B.; Durlauf, S. N.: Convergence in international output. Journal of applied econometrics 10, 97-108 (1995) |

[8] | Delong, J. B.: Productivity growth, convergence and welfare: comment. American economic review 78, 1138-1154 (1988) |

[9] | Dowrick, S.; Nguyen, D. -T.: OECD comparative economic growth 1950–1985: catch up and convergence. American economic review 79, 1010-1030 (1989) |

[10] | Durlauf, S. N.: Nonergodic economic growth. Review of economic studies 60, 349-366 (1993) · Zbl 0774.90017 |

[11] | Durlauf, S. N.; Johnson, P. A.: Multiple regimes and cross-country growth behavior. Journal of applied econometrics (1995) |

[12] | Jones, L.; Manuelli, R.: A convex model of equilibrium growth: theory and policy implications. Journal of political economy 98, 1008-1038 (1990) |

[13] | Lucas, R. E.: On the mechanics of economic development. Journal of monetary economics 22, 3-42 (1988) |

[14] | Mankiw, N. G.; Romer, D.; Weil, D. N.: A contribution to the empirics of economic growth. Quarterly journal of economics 107, 407-437 (1992) · Zbl 0825.90191 |

[15] | Murphy, K.; Shleifer, A.; Vishny, R.: Industrialization and the big push. Journal of political economy 97, 1003-1026 (1989) |

[16] | Quah, D.: International patterns of growth: I. Persistence in cross-country disparities. Working paper (1992) |

[17] | Quah, D.: Galtons’s fallacy and tests of the convergence hypothesis. Scandinavian journal of economics 95, 427-443 (1993) |

[18] | Quah, D.: Empirical cross-section dynamics in economic growth. European economic review 37, 426-434 (1993) |

[19] | Romer, P. M.: Increasing returns and long run growth. Journal of political economy 94, 1002-1037 (1986) |

[20] | Solow, R. M.: A contribution to the theory of economic growth. Quarterly journal of economics 70, 65-94 (1956) |

[21] | Summers, R.; Heston, A.: A new set of international comparisons of real product and prices: estimates for 130 countries. Review of income and wealth 34, 1-26 (1988) |

This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.