Munich Personal RePEc Archive

Divided: The Two Americas-Examining Club Convergence in the U.S.

Barrios González, María Candelaria and Tierney, Heather L.R. and Nazarov, Zafar and Kim, Myeong Hwan (2019): Divided: The Two Americas-Examining Club Convergence in the U.S.

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Abstract

This paper finds club convergence within the 50 U.S. states using Phillips and Sul’s (2007, 2009) regression-based convergence test using per capita real state domestic product from 1997 to 2017. Two clubs with diverging transition paths are found. Clubs 1 and 2 mimics the divide that is seen in the flow of funds from the federal government to the states (DiNapoli 2017, 2018). Hence, the log t test of Phillips and Sul (2007) is telling the tale of there being two Americas if all factors remain the same, but this need not be the case with the proper policy prescription.

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