EconStor >
University of Chile >
Department of Economics, University of Chile >
Estudios de Economia, Department of Economics, University of Chile >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/66671
  
Title:Regime-dependent output convergence in Latin America PDF Logo
Authors:Holmes, Mark J.
Issue Date:2006
Citation:[Journal:] Estudios de Economía [ISSN:] 0718-5286 [Volume:] 33 [Year:] 2006 [Issue:] 1 [Pages:] 65-81
Abstract:This paper tests for long-run output convergence between a sample of eight Latin American countries and over the study period 1900-2003. The key contribution of this paper is in terms of the econometric methodology where non-stationarity of log real per capita income differentials is tested within a Markov regime-switching framework. In contrast to existing studies, this paper defines two new concepts of output convergence where one allows for the possibility that output differentials behaviour either switches between stationary and non-stationary regimes (partial convergence), or switches between stationary regimes characterised by differing degrees of persistence (varied convergence). Whereas standard univariate and panel data unit root testing clearly suggest that output differentials are non-stationary, employment of the regime-switching methodology indicates that most of the sample is characterised by the existence of two distinct stationary regimes. Furthermore, it is argued that the often-cited convergence rate of two per cent per annum is likely to be an underestimate.
Subjects:output convergence
regime-switching
stationarity
unit root tests
JEL:F0
F3
C2
Document Type:Article
Appears in Collections:Estudios de Economia, Department of Economics, University of Chile

Files in This Item:
File Description SizeFormat
576827770.pdf219.35 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/66671

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.