A Contribution to the Empirics of Convergence in Real GDP Growth: The Role of Financial Crises and Exchange-Rate Regimes

25 Pages Posted: 8 Mar 2014

See all articles by Amalia Morales-Zumaquero

Amalia Morales-Zumaquero

University of Malaga - Departamento de Teoria e Historia Economica

Simon Sosvilla-Rivero

UCM Institute for Economic Analysis

Date Written: February 27, 2014

Abstract

This paper investigates the convergence in real Gross Domestic Product (GDP) growth focusing on the impact of financial crises (i.e. banking crises, currency crises and debt crises) and nominal exchange rate regimes (i.e. fixed, intermediate and flexible) on convergence. To that end, we compute four convergence indicators (σ-convergence, γ-convergence, absolute β-convergence and conditional β-convergence), for 163 countries classified into four income groups during the 1970-2011 period. Results suggest that: (i) There is evidence in favor of σ-convergence and γ-convergence only for high income countries; (ii) absolute and conditional β-convergence are presented in each of the four income groups of countries under study; (iii) exchange-rate regimes seem to play some role in upper-middle and lower-middle income countries; and (iv) financial crises have a negative and significant impact on GDP growth independently of the level of income of countries.

Keywords: Convergence indicators, financial crises, nominal exchange-rate regimes.

JEL Classification: O47, G15, F33

Suggested Citation

Morales-Zumaquero, Amalia and Sosvilla-Rivero, Simon, A Contribution to the Empirics of Convergence in Real GDP Growth: The Role of Financial Crises and Exchange-Rate Regimes (February 27, 2014). Available at SSRN: https://ssrn.com/abstract=2405923 or http://dx.doi.org/10.2139/ssrn.2405923

Amalia Morales-Zumaquero

University of Malaga - Departamento de Teoria e Historia Economica ( email )

Malaga, Málaga 29004
Spain

Simon Sosvilla-Rivero (Contact Author)

UCM Institute for Economic Analysis ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain
+34913932626 (Phone)

HOME PAGE: http://www.ucm.es/info/ecocuan/ssr/

Register to save articles to
your library

Register

Paper statistics

Downloads
34
Abstract Views
287
PlumX Metrics