Feels Like Going Backwards: Assessing Income Convergence with a Long-Run Forecasting Approach

Silva Lopes, Artur (2022): Feels Like Going Backwards: Assessing Income Convergence with a Long-Run Forecasting Approach.

Abstract

Relying on low frequency econometric methods, a new simple method to assess international income convergence is introduced. It implements the long-run forecasting definition and discards short and medium-term information contents of the data as these may produce misleading evidence. Robustness to non-stationarities is achieved using first differences of logged per capita incomes.

Application to a selected sample of 67 different countries, including only one low-income country, provides scant support to the hypothesis. Even for a 120-year horizon, almost 4/5 or 80% of the population of the (positively biased selected) sample is forecast to still live in countries significantly lagging behind the leader.

• Item Type: MPRA Paper
• Language: English
• Keywords: income convergence; low frequency; interval forecasting; growth empirics
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N10 - General, International, or Comparative; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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