Paper #236

Title:

It's still 2%: evidence on convergence from 116 years of the US States panel data

Author:

Etsuro Shioji

Date:

September 1997

Abstract:

A new debate over the speed of convergence in per capita income across economies is going on. Cross sectional estimates support the idea of slow convergence of about two percent per year. Panel data estimates support the idea of fast convergence of five, ten or even twenty percent per year. This paper shows that, if you ``do it right'', even the panel data estimation method yields the result of slow convergence of about two percent per year.

Keywords:

income convergence, panel data estimation, biases, maximum likelihood, US states

JEL codes:

O40, C23, O51

Area of Research:

Macroeconomics and International Economics

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