Non-convergent incomes with a new DF-Fourier test: most likely you go your way (and I'll go mine)

Silva Lopes, Artur (2021): Non-convergent incomes with a new DF-Fourier test: most likely you go your way (and I'll go mine).

Abstract

Motivated by the purpose to assess the income convergence hypothesis, a simple new Fourier-type unit root test of the Dickey-Fuller family is introduced and analysed. In spite of a few shortcomings that it shares with rival tests, the proposed test generally improves upon them in terms of power performance in small samples.

The empirical results that it produces for a recent and updated sample of data for 25 countries clearly contrast with previous evidence produced by the Fourier approach and, more generally, they also contradict a recent wave of optimism concerning income convergence, as they are mostly unfavourable to it. This evidence appears to be particularly robust to the possibility of undetected convergence.\\

• Item Type: MPRA Paper
• Language: English
• Keywords: income convergence; unit root tests; structural breaks
• 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; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; 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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