Convergence in Output and Its Sources Among Industrialised Countries (eBook)

Macarena Hernández Salmerón is Research Fellow at Pablo de Olavide University. Her research interests lie in the fields of Macroeconomics and Development Economics. She works as a regional economy analyst for the Regional Government of Andalusia and has participated in several publications of the Economics, Innovation, Science and Employment Department about the Andalusian economy. Diego Romero-Ávila is Associate Professor at Pablo de Olavide University. He has been Research Fellow at the European Central Bank and Visiting Professor at Vienna University of Economics and Business. His research interests lie in the fields of Macroeconomics and Development Economics. He has published articles in such academic journals as International Economic Review, Journal of Law and Economics, Journal of Money, Credit and Banking, Canadian Journal of Economics, World Development, Economic Inquiry, Journal of Banking and Finance and European Journal of Political Economy, among others.

Acknowledgments 6
Contents 7
Abstract 9
1 Introduction 10
Abstract 10
2 Model Specification and Data 17
Abstract 17
2.1 Model Specification and Definitions of Convergence 17
2.2 Data Description 20
3 Econometric Methods 23
Abstract 23
3.1 Test for Cross-Sectional Dependence in Panels 23
3.2 Panel Unit Root and Stationarity Tests with Cross-Sectional Dependence 24
3.2.1 Smith et al. (2004) Panel Unit Root Statistics 24
3.2.2 Breitung and Das (2005) Panel Unit Root Test 26
3.2.3 Chang (2002) Panel Unit Root Tests 26
3.2.4 Hadri (2000) Panel Stationarity Statistic 27
3.2.5 Choi (2002) Panel Unit Root Tests 28
3.2.6 Moon and Perron (2004) Panel Unit Root Statistics 29
3.2.7 Pesaran (2007) Panel Unit Root Statistics 30
3.2.8 Harris et al. (2005) Panel Stationarity Statistic 31
4 Empirical Results 33
Abstract 33
4.1 Initial Results Regarding sigma -Convergence 33
4.2 Results Regarding Cross-Sectional Dependence 38
4.3 Analysis of Stochastic Convergence 40
4.3.1 Convergence in Real GDP per Worker 40
4.3.2 Convergence in the Sources of Output per Worker 44
4.4 Analysis of Deterministic Convergence 50
5 PANIC Approach 53
Abstract 53
5.1 Methodological and Conceptual Limitations of the Previous Analysis 53
5.2 PANIC Methodology 56
5.2.1 Analysis of the Idiosyncratic Component 57
5.2.2 Analysis of the Common Component 58
6 PANIC Results 60
Abstract 60
6.1 Determining the Optimal Number of Common Factors 60
6.2 Applying the PANIC Approach to Log Real GDP per Worker and Its Sources 62
6.2.1 PANIC Analysis of Stochastic Convergence 68
6.2.2 PANIC Analysis of Deterministic Convergence 69
6.3 Discussion of Results 70
7 Concluding Remarks 71
Abstract 71
References 76