Economic Transition and Growth
Publication Type
Journal Article
Publication Date
11-2009
Abstract
Some extensions of neoclassical growth models are discussed that allow for cross-section heterogeneity among economies and evolution in rates of technological progress over time. The models offer a spectrum of transitional behavior among economies that includes convergence to a common steady-state path as well as various forms of transitional divergence and convergence. Mechanisms for modeling such transitions, measuring them econometrically, assessing group behavior and selecting subgroups are developed in the paper. Some econometric issues with the commonly used augmented Solow regressions are pointed out, including problems of endogeneity and omitted variable bias which arise under conditions of transitional heterogeneity. Alternative regression methods for analyzing economic transition are given which lead to a new test of the convergence hypothesis and a new procedure for detecting club convergence clusters. Transition curves for individual economies and subgroups of economies are estimated in a series of empirical applications of the methods to regional US data, OECD data and Penn World Table data. Copyright (C) 2009 John Wiley & Sons, Ltd.
Keywords
Panel - data approach, Convergence hypothesis, Productivity growth, Tests, Empirics, Income, Regression, Poverty, Welfare, Clubs
Discipline
Econometrics
Research Areas
Econometrics
Publication
Journal of Applied Econometrics
Volume
24
Issue
7
First Page
1153
Last Page
1185
ISSN
0883-7252
Identifier
10.1002/jae.1080
Publisher
Wiley
Citation
Peter C. B. PHILLIPS and Sul, D..
Economic Transition and Growth. (2009). Journal of Applied Econometrics. 24, (7), 1153-1185.
Available at: https://ink.library.smu.edu.sg/soe_research/1816