Productivity Convergence: A Panel Data Approach in the Presence of Cross-Country Correlation

UCSC Dept. of Economics Working Paper No. 403

11 Pages Posted: 6 Nov 1998

See all articles by Antonio I. Garcia Pascual

Antonio I. Garcia Pascual

International Monetary Fund (IMF) - Western Hemisphere Department; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: June 1998

Abstract

This paper reexamines previous favorable results of productivity convergence, accounting for the presence of cross-country correlation. The high levels of correlation among the OECD countries analyzed cause a significant size distortion in the testing procedure. The effect of the correlation structure on the distribution of the panel data unit root (PDUR) test statistic is investigated using Monte Carlo simulation techniques. The change in the distribution of the PDRU statistic switches the inferences drawn by the test: only 2 out of the 9 sectors analyzed show evidence of productivity convergence once the correlation structure is accounted for.

JEL Classification: E23, C33

Suggested Citation

Garcia Pascual, Antonio I., Productivity Convergence: A Panel Data Approach in the Presence of Cross-Country Correlation (June 1998). UCSC Dept. of Economics Working Paper No. 403. Available at SSRN: https://ssrn.com/abstract=117448 or http://dx.doi.org/10.2139/ssrn.117448

Antonio I. Garcia Pascual (Contact Author)

International Monetary Fund (IMF) - Western Hemisphere Department ( email )

700 19th Street NW
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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