Absolute Convergence across Time and Space: New Empirical Evidence for an Old Debate
Absolute Convergence across Time and Space: New Empirical Evidence for an Old Debate

Summary/Abstract: This paper contributes to the ongoing convergence debate in two ways: First, using the recent Penn World Table’s database (PWT 6.1), ranging from 1960 to 2000, it shows the absence of the so-called absolute convergence across the world economy at large in the past four decades. While the decade- by- decade regressions indicate similar results, things seem to have worsened in the 1980s and 1990s. One of the primary suspects in this regard is the debt and financial crises. Second, a separate regression for developing countries alone indicates the absence of unconditional (absolute) convergence across this group of coun-tries. However, once we split countries into groups with similar political, eco-nomic and institutional parameters (OECD and EU, for instance), it appears that there is an evidence for unconditional convergence.

• Details
• Contents