International output convergence: evidence from an autocorrelation function approach

Abstract

SUMMARYThis paper uses an autocorrelation function (ACF) approach to develop a new testing procedure for international output convergence. We define convergence in terms of sample ACFs of detrended output per capita, and construct an inference set-up based on resampling and subsampling techniques for dependent data. Using per capita GDP for 15 OECD countries observed over a century, we find that the hypothesis of conditional convergence is unsupported; that, the USA apart, the linearized neoclassical growth model fails to replicate the transitional dynamics of OECD economies; and that these economies do not behave like a club.

Switching and asymmetric behaviour of the Okun coefficient in the US: Evidence for the 1948–2015 period

“…Although some researchers (e.g. Bernard and Durlauf, 1995;Caggiano and Leonida, 2009) argue that the de-trended GDP in the US is I(0), this finding does not affect our results as we use cyclical output and cyclical unemployment. As can be seen from the results of six unit root tests in Table 2, both series are stationary.…”

Euro Area Business Cycles in Turbulent Times: Convergence or Decoupling?

“…This implies that there exists a τ * finite such that the autocorrelation function (ACF) of G c,t − F t is zero from then onward, i.e. ρ(τ ) = 0 for all τ > τ * (see Caggiano and Leonida (2009), for a discussion). Put differently, the time required for the ACF to go to zero is a measure of the time required for national economies to revert back to the euro area factor, given a one-time deviation from it.…”

Great Divergence and Great Convergence

“…From this assumption Mankiw, Romer, and Weil conclude that "Solow's model predicts convergence only after controlling for the determinants of the steady state", nominating this phenomenon "conditional convergence". The fi nding of conditional convergence is now considerably well established in the empirical literature, having been regarded in numerous studies on the data of the second half of the twentieth century with different conditioning variables (see, e.g., Caggiano and Leonida 2009 ;Petrakos and Artelaris 2009 ;Romero-Avila 2009 ;Owen et al 2009 ;Sadik 2008 ;Frantzen 2004 ;de la Fuente 2003 ;Jones 1997 ;Caselli et al 1996 ;Sala-i-Martin 1996 ;King and Levine 1993 ;Levine and Renelt 1992 ;Barro 1991 ;De Long and Summers 1991 ).…”

“…Initially, there appeared some works that substantially proved the existence of convergence itself across OECD through a systematic catching up in levels of total factor productivity (see, e.g., Dowrick and Nguyen 1989 ). Later on, the focus shifted to other aspects, such as convergence in aggregate productivity (Bernard and Jones 1996a , b ), convergence in international output (Bernard and Durlauf 1995 ;Caggiano and Leonida 2009 ), the impact of globalization upon convergence in OECD (Williamson 1996 ), various sources of convergence (i.e. government size and labor market performance) (de la Fuente 2003 ), technological diffusion and productivity convergence (Frantzen 2004 ), stochastic convergence of per capita real output (Romero-Avila 2009 ), and country size impact upon convergence (Petrakos and Artelaris 2009 ), etc. In addition to the above said, one should note that the main conditions of the convergence with the high-income economies were identifi ed, fi rst of all, as (1) a suffi ciently high level of development of human capital (comparable with the one of the high-income economies) (e.g., Barro 1991 ;Mankiw et al 1992 ;Cohen 1996 );…”