Quah, Danny (1993) Galton's fallacy and tests of the convergence hypothesis. Econometrics; EM/1993/265, EM/1993/265. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.Full text not available from this repository.
Recent tests for the convergence hypothesis derive from regressing average growth rates on initial levels: a negative initial coefficient is interpreted as convergence. These tests turn out to be plagued by Galton's classical fallacy of regression towards the mean. Using a dynamic version of Galton's fallacy, I establish that coefficients of arbitrary signs in such regressions are consistent with an unchanging cross-section distribution of incomes. Alternative, more direct empirics used here show a tendency for divergence, rather than convergence, of cross-country incomes.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 1993 the author|
|Uncontrolled Keywords:||Convergence hypothesis; regressing average growth rates; Galton's fallacy; coefficients of arbitrary signs; divergence of cross-country incomes.|
|Library of Congress subject classification:||H Social Sciences > HB Economic Theory|
|Sets:||Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
|Date Deposited:||27 Apr 2007|
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