DP954 Convergence Empirics Across Economies with (Some) Capital Mobility

Author(s): Danny Quah

Publication Date: May 1994

Keyword(s): Convergence , Education , Evolving Distribution , First Passage Time , Growth , Investment , Polarization , Stochastic Kernel

JEL(s): C23 , F43 , O47

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP954.asp

This paper reinterprets a simple model of growth and fluctuations across many economies to allow for the explicit characterization of the dynamically-evolving cross-economy distribution of income. Such a framework provides a more natural, revealing study of the convergence hypothesis. The data show limited intra-distribution mobility in incomes across economies and thus, little convergence. The analysis uncovers some `convergence club'-like dynamics, and reveals the wide diversity in growth experiences across countries. Conditioning on physical capital investment, secondary school enrolment, and a dummy for the African continent fails to overturn these characterizations.