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Testing for Absolute Convergence: A Panel Data Approach

  • Samarjit Das
  • Manisha Chakrabarty
Part of the New Economic Windows book series (NEW)

Abstract

This paper develops a new test for absolute convergence under cross sectional dependence. A detailed Monte Carlo study is then carried out to evaluate the performance of this test in terms of size and power. From our Monte Carlo simulations it turns out that the test performs well with respect to size and power. The proposed test is then applied to find whether there is absolute convergence in terms of real per capita income across various countries in OECDs. Using our test which is robust to cross sectional dependence, it is found that various countries in OECD are absolutely convergent.

Keywords

Unit Root Test Absolute Convergence Nominal Size Panel Unit Root Test Cross Sectional Dependence 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer-Verlag Italia 2010

Authors and Affiliations

  • Samarjit Das
    • 1
  • Manisha Chakrabarty
    • 2
  1. 1.Economic Research UnitIndian Statistical InstituteKolkataIndia
  2. 2.Indian Institute of ManagementKolkataIndia

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