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Empirics for Economic Growth and Convergence (1996)
| Venue: | European Economic Review, Vol |
| Citations: | 202 - 4 self |
BibTeX
@ARTICLE{Quah96empiricsfor,
author = {Danny T. Quah and Danny T. Quah},
title = {Empirics for Economic Growth and Convergence},
journal = {European Economic Review, Vol},
year = {1996},
pages = {1353--1375}
}
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Abstract
important in re-shaping this article. X. Sala-i-Martin has generously donated insight and time to try and make me understand. He need not, however, agree with all my statements below. All calculations were performed using the econometrics shell tsrf. Nontechnical Summary The convergence hypothesis|that poor economies might \catch up"| has generated a huge empirical literature: this paper critically reviews some of the earlier key ndings, clari es their implications, and relates them to more recent results. Particular attention is devoted to interpreting convergence empirics. The paper argues that relating them to growth theories, as usually done, gives but one interpretation to convergence dynamics; it does not exhaust their importance. Instead, if we relate convergence to the dynamics of income distributions, it broadens the issues on which such empirics can shed light; it connects with policy concerns on persistent or growing inequality, regional core-periphery stagnation, and tendencies for ongoing capital ows across developed and developing countries. The main ndings are: (1) The much-heralded uniform 2 % rate of convergence could arise for reasons unrelated to the dynamics of economic 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 clari es those di culties. (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. Empirics for Economic Growth and Convergence by
Keyphrases
economic growth policy concern convergence hypothesis rich richer poor economy di culties panel data analysis time series modelling income distribution convergence club economic growth clari key ndings huge empirical literature evidence support baumol nontechnical summary regional core-periphery stagnation particular attention usual empirical analysis cross-section recent result capital ows u state convergence empirics convergence regression middle class vanishing main ndings growth theory
