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Testing Nonlinear Convergence in Malaysia

Author

Listed:
  • Habibullah, Muzafar

    (Faculty of Economics and Management Universiti Putra Malaysia 43400 UPM Serdang Selangor Malaysia)

  • Affizzah Awang Marikan, Dayang

    (Faculty of Economics and Business Universiti Malaysia Sarawak 94300 Kota Samarahan Sarawak MALAYSIA)

  • senliew, venus

    (Faculty of Economics and Business Universiti Malaysia Sarawak 94300 Kota Samarahan Sarawak MALAYSIA)

  • Lim, kian

    (Labuan School of International Business and Finance Labuan International Campus Universiti Malaysia Sabah P.O. Box 80594 87015 F.T. Labuan MALAYSIA)

Abstract

The purpose of the present paper is to examine income convergence in Malaysia by applying the nonlinear unit root test presented by Kapetanios et al. (KSS 2003) and extended by Chong et al. (CHLL 2008) to permit the test of long-run convergence and catching-up hypotheses. The KSS-CHLL nonlinear unit root is applied to the test of nonlinear convergence between thirteen states with respect to Wilayah Persekutuan, the richest state of Malaysia, for the period of 1965 to 2003. Generally, the results suggest that out of the thirteen states, Kedah, Negeri Sembilan, Perak, Perlis and Selangor support the long-run convergence hypothesis; while Johor, Kelantan, Melaka, Pahang and Penang suggest catching-up. Lastly, Sabah, Sarawak and Terengganu indicate income divergence from Wilayah Persekutuan.

Suggested Citation

  • Habibullah, Muzafar & Affizzah Awang Marikan, Dayang & senliew, venus & Lim, kian, 2013. "Testing Nonlinear Convergence in Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 47(1), pages 155-162.
    • Handle: RePEc:ukm:jlekon:v:47:y:2013:i:1:p:155-162
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    References listed on IDEAS

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