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Cross-country analyses of economic growth: an econometric survey

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  • Fernanda Llussa

Abstract

This paper reviews the econometric methodology on panel data estimation and testing as applied to the study of convergence in growth empirics. The concept of absolute convergence states that the poorer economies should be growing at a faster rate, catching up the richer ones. The empirical failure of absolute convergence resulted in the development of alternative theories to explain long-term growth: the endogenous growth theories and the conditional convergence, the idea that countries may have different steady-states and it is the distance from their own steady-state that determines the rate of economic growth. This paper focuses on conditional convergence and its empirical testing. It discusses and compares the different econometric methodologies used in cross-section and panel data studies of conditional convergence. Also presented are the empirical results obtained by the various authors.

Suggested Citation

  • Fernanda Llussa, 2007. "Cross-country analyses of economic growth: an econometric survey," Nova SBE Working Paper Series wp518, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp518
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318, Elsevier.
    3. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    4. Loayza, Norman V. & DEC, 1994. "A test of the international convergence hypothesis using panel data," Policy Research Working Paper Series 1333, The World Bank.
    5. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-389, September.
    6. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    7. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    8. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    General method of moments; conditional convergence; panel data;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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