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On the Power of Absolute Convergence Tests
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Rómulo A. Chumacero
Published/Copyright:
May 7, 2006
This paper analyzes whether or not the econometric methods usually applied to test for absolute convergence have provided this hypothesis a "fair" chance. I show that traditional (absolute and conditional) convergence tests are not consistent with even the simplest model that displays convergence. Furthermore, claims of divergence on the grounds of bimodalities in the distribution of GDP per capita can be made consistent with models in which neither divergence nor twin peaks are present in the long run.
Published Online: 2006-5-7
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Instrumental-Variables Estimation in Markov Switching Models with Endogenous Explanatory Variables: An Application to the Term Structure of Interest Rates
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- Output and Inflation Responses to Credit Shocks: Are There Threshold Effects in the Euro Area?
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