Analysing Convergence through the Distribution Dynamics Approach: Why and How?
41 Pages Posted: 5 Sep 2007
Date Written: September 2007
Abstract
The convergence hypothesis has stimulated a heated debate within the growth literature. The present paper compares the two most commonly adopted empirical approaches, the regression approach and the distribution dynamics approach, and argues that the former fails to uncover important features of the dynamics that might characterise the convergence process. Next, it provides an in depth description of the features and underlying assumptions of the distribution dynamics approach as well as a detailed discussion of some important aspects related to the estimate of stochastic kernels via kernel density estimators. Finally, the empirical section allows to emphasises the interpretational advantages stemming from the use of stochastic kernels to capture the evolution of the entire cross-sectional income distribution. Incidentally, through a comparison between the results obtained from alternative sets of Italian regions, it suggest that the use of administrative regions could lead to ambiguous results.
Keywords: Distribution Dynamics, Stochastic Kernel, Kernel Density Estimation, Regions
JEL Classification: C14, C20, O40, O52, R10
Suggested Citation: Suggested Citation
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