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Empirics for economic growth and convergence

Quah, Danny (1995) Empirics for economic growth and convergence. Econometrics; EM/1995/281, EM/1995/281. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.

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Abstract

The convergence hypothesis has generated a huge empirical literature: this paper critically reviews some of the earlier key findings, clarifies their implications, and relates them to more recent results. Particular attention is devoted to interpreting convergence empirics. The main findings are: (1) The much-heralded uniform 2% rate of convergence could arise for reasons unrelated to the dynamics of eonomic growth. (2) Usual empirical analyses - cross-section (conditional) convergence regressions, time series modelling, panel data analysis - can be misleading for understanding convergence; a model of polarization in economic growth clarifies those difficulties. (3) The data, more revealingly modelled, show persistence 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, unambiguous up to sampling error, is observed across US states.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk
Additional Information: © 1995 the author
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Collections > Economists Online
Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: EM/1995/281
Date Deposited: 27 Apr 2007
URL: http://eprints.lse.ac.uk/2137/

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