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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Convergence Clubs; Economic Convergence; Log t-Test; Growth and Development; U.S.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; 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

References

Aksoy, T., H. Taştan, and O. Kama. “Revisiting Income Convergence in Turkey: Are there Convergence Clubs?” Growth and Change, 50(3), 2019, 1-33. Apergis, N., C. Christou, R. Gupta, and S. M. Miller. “Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across States in the U.S.” International Advances in Economics Research, 24, 2018, 147-161. Apergis, N. and J.E. Payne. “Convergence in U.S. Housing Prices by State: Evidence from the Club Convergence and Clustering Procedure.” Letters in Spatial and Resource Sciences, 5(2), 2011, 103-111. Barro, R. and X. Sala-i-Martin. “Convergence” Journal of Political Economy, 100(2), 1992, 223-251. Barro, R. and X. Sala-i-Martin. “Technological Diffusion, Convergence, and Growth.” Journal of Economics Growth, 2, 1997, 1–27. Bartkowska, M. and A. Riedl. “Regional Convergence Clubs in Europe: Identification and Conditioning Factors.” Economic Modelling, 29, 2012, 22-31. Choi, C. and X. Wang. “Discontinuity of Output Convergence within the United States: Why Has the Course Changed?” Economic Inquiry, 53, 2015, 49-71. DiNapoli, T.P. New York’s Balance of Payments in the Federal Budget, Federal Fiscal Year 2016, 2017, 1-36. https://www.osc.state.ny.us/reports/budget/2017/federal-budget-fiscal-year-2016.pdf DiNapoli, T.P. New York’s Balance of Payments in the Federal Budget, Federal Fiscal Year 2017, 2018, 1-36. https://www.osc.state.ny.us/reports/budget/2018/federal-budget-fiscal-year-2017.pdf Durlauf, S. N. and P. A. Johnson. “Multiple Regimes and Cross-Country Growth Behavior.” Journal of Applied Econometrics, 10, 1995, 365–384. Durlauf, S. N., P.A. Johnson, and J.R. Temple. “Growth Econometrics.” Handbook of Economic Growth, 1, 2005, 555-677. Galor, O. “Convergence? Inferences from Theoretical Models.” The Economic Journal, 106, 1996, 1056-1069. Howitt, P. and D. Mayer-Foulkes. “R&D, Implementation and Stagnation: a Schumpeterian Theory of Convergence Clubs.” Journal of Money Credit and Banking, 37 (1), 2005, 147–177. Kim, Y. S. and J.J. Rous. “House Price Convergence: Evidence from US State and Metropolitan Area Panels.” Journal of Housing Economics, 21, 2012, 169–186. Lucas, R. “On the Mechanics of Economic Development.” Journal of Monetary Economics, 22, 1988, 3–42. Mankiw, N.G., D. Romer, and D.N. Weil. “A Contribution to the Empirics of Economic Growth.” The Quarterly Journal of Economics, 107(2), 1992, 407-437. Monfort, M., J.C. Cuestas, and J. Ordóñez. “Real Convergence in Europe: A Cluster Analysis. Economic Modelling, 33, 2013, 689-694. Phillips, P.C., and D. Sul. “Economic Transition and Growth.” Journal of Applied Econometrics, 24 (7), 2007, 1153-1185. Phillips, P.C. and D. Sul. “Transition Modeling and Econometric Convergence Test.” Econometrica, 75 (6), 2009, 2009, 1771-1855. Romer, P. “Increasing Returns and Long Run Growth.” Journal of Political Economy, 94, 1986, 1002–1036. Solow, R. M. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics, 70, 1956, 65–94. Von Lyncker, K. and R. Thoennessen. “Regional Club Convergence in the EU: Evidence from a Panel Data Analysis.” Empirical Economics, 52 (2), 2017, 525-553.