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Testing for Output Convergence: A Re-examination

Author

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  • Yin-wong Cheung

    (University of California)

  • Antonio Garcia-Pascual

    (International Monetary Fund)

Abstract

This paper investigates output convergence for the G7 countries using panel time-series techniques. We consider both the null hypotheses of no convergence and convergence. It is shown that inferences on output convergence depend on which one of the two null hypotheses is considered. Further, the no convergence results reported in previous studies using the time-series definition may be attributed to the low power of the test procedures being used. Our results also highlight some potential problems on interpreting results from some typical panel unit root and stationarity tests.

Suggested Citation

  • Yin-wong Cheung & Antonio Garcia-Pascual, 2004. "Testing for Output Convergence: A Re-examination," Working Papers 052004, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:052004
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    More about this item

    Keywords

    Output convergence; panel data test; unit root test; stationarity test;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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