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Are income differences within the OECD diminishing? Evidence from Fourier unit root tests

King, Alan; Ramlogan-Dobson, Carlyn

Authors

Alan King



Abstract

We investigate the income convergence hypothesis for 24 OECD countries using Fourier-type unit root tests that can account for structural breaks of unknown number, timing and functional form in a series’ data generating process. Our results indicate that all 24 countries have followed a nonlinear underlying growth path (relative to the US) over the post-war era. These growth paths indicate that as many as half of the countries sampled are systematically catching-up with the US. Only a handful show evidence of being in relative decline, but the fact that this group includes several G7 economies is of concern.

Journal Article Type Article
Publication Date Apr 1, 2014
Journal Studies in Nonlinear Dynamics & Econometrics
Print ISSN 1558-3708
Electronic ISSN 1081-1826
Publisher De Gruyter
Peer Reviewed Peer Reviewed
Volume 18
Issue 2
Pages 185–199
APA6 Citation King, A., & Ramlogan-Dobson, C. (2014). Are income differences within the OECD diminishing? Evidence from Fourier unit root tests. Studies in Nonlinear Dynamics and Econometrics, 18(2), 185–199. https://doi.org/10.1515/snde-2013-0008
DOI https://doi.org/10.1515/snde-2013-0008
Keywords Fourier function; Income convergence; Nonlinear mean-reversion; Nonlinear trend
Publisher URL https://www.degruyter.com/view/j/snde.2014.18.issue-2/snde-2013-0008/snde-2013-0008.xml