Convergence in the OECD: Transitional Dynamics or Narrowing Steady-State Differences?

9 Pages Posted: 5 Jun 2006

See all articles by Rafael Doménech

Rafael Doménech

University of Valencia - Department of Economic Analysis

Javier Andrés

University of Valencia - Department of Economics

José Emilio Boscá Mares

University of Valencia - Department of Economic Analysis

Abstract

In this article we show that the picture emerging from models that allow for generalized parameter heterogeneity in convergence equations changes our view of the convergence process within the OECD. Estimation methods that allow for non- or partial heterogeneity stress the importance of transitional dynamics. Thus the observed reduction in the dispersion of per capita income is mostly explained by transitional dynamics. When generalized parameter heterogeneity is allowed for, we find that the observed narrowing of incomes has little bearing on transitional dynamics. Convergence in this case happens because the long-run features of these countries are becoming increasingly similar. (JEL C13, C23, O41, O57)

Suggested Citation

Doménech, Rafael and Andrés, Javier and Boscá Mares, José Emilio, Convergence in the OECD: Transitional Dynamics or Narrowing Steady-State Differences?. Economic Inquiry, Vol. 42, Issue 1, pp. 141-149, 2004, Available at SSRN: https://ssrn.com/abstract=906212

Rafael Doménech

University of Valencia - Department of Economic Analysis ( email )

Campus de los Naranjos
46022 Valencia
Spain
+96 382 8210 (Phone)
+96 382 8249 (Fax)

Javier Andrés (Contact Author)

University of Valencia - Department of Economics ( email )

E-46022 Valencia, Valencia E-46022
Spain
(34 96) 382 8260 (Phone)
(34 96) 382 8249 (Fax)

José Emilio Boscá Mares

University of Valencia - Department of Economic Analysis ( email )

Campus de los Naranjos
46022 Valencia
Spain

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