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Convergence Equations and Income Dynamics: The Sources of OECD Convergence, 1970-95

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  • de la Fuente, Angel

Abstract

This paper illustrates how convergence equations can be used to analyse the dynamics of the income distribution, thus overcoming some of the limitations of this methodology noted by Quah. Using panel data for a sample of OECD countries, we estimate a growth equation that relates the growth rate of income per capita to the rates of accumulation of physical, human and technological capital, the share of government expenditures in GDP and the behaviour of the labour market, while allowing for the main convergence mechanisms identified in the literature. The estimated model and the underlying data are then used in a convergence accounting exercise, which yields quantitative estimates of the contribution of each of these variables to the relative growth performance of each country and to observed income convergence in the sample.

Suggested Citation

  • de la Fuente, Angel, 1998. "Convergence Equations and Income Dynamics: The Sources of OECD Convergence, 1970-95," CEPR Discussion Papers 1794, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1794
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    Citations

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    Cited by:

    1. Ceyhun Elgin & Ferda Erturk, 2016. "Is Informality a Barrier to Convergence?," Economics Bulletin, AccessEcon, vol. 36(4), pages 2556-2568.
    2. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    3. Francisco Alvarez & Gustavo A. Marrero & Luis A. Puch, "undated". "Air pollution and the macroeconomy across European countries," Working Papers 2005-10, FEDEA.

    More about this item

    Keywords

    Convergence; Distribution Dynamics; Growth;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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