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

King, Alan; Ramlogan-Dobson, Carlyn

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.

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 / sponsored by the MIT Press and the Society for Nonlinear Dynamics and Econometrics, 18(2), 185-199. https://doi.org/10.1515/snde-2013-0008

• Journal Article Type: Article
• Online Publication Date: Aug 27, 2013
• Publication Date: Apr 1, 2014
• Deposit Date: May 15, 2019
• Journal: Studies in Nonlinear Dynamics and Econometrics
• Print ISSN: 1081-1826
• Peer Reviewed: Peer Reviewed
• Volume: 18
• Issue: 2
• Pages: 185-199
• DOI: https://doi.org/10.1515/snde-2013-0008
• Keywords: Fourier function; Income convergence; Nonlinear mean-reversion; Nonlinear trend
• Public URL: https://hull-repository.worktribe.com/output/1788055
• Publisher URL: https://www.degruyter.com/view/j/snde.2014.18.issue-2/snde-2013-0008/snde-2013-0008.xml