TY  - JOUR
AU  - Bernard,Andrew B.
AU  - Durlauf,Steven N.
TI  - Interpreting Tests of the Convergence Hypothesis
JF  - National Bureau of Economic Research Technical Working Paper Series
VL  - No. 159
PY  - 1994
Y2  - June 1994
UR  - http://www.nber.org/papers/t0159
L1  - http://www.nber.org/papers/t0159.pdf
N1  - Author contact info:
Andrew B. Bernard
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH  03755
Tel: 603/646-0302
Fax: 603/646-0995
E-Mail: Andrew.B.Bernard@dartmouth.edu

Steven N. Durlauf
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI  53706-1393
Tel: 608/263-3859
Fax: 608/262-2033
E-Mail: sdurlauf@ssc.wisc.edu
AB  - This paper provides a framework for understanding the cross- section and time series approaches which have been used to test the convergence hypothesis.  First, we present two definitions of convergence which capture the implications of the neoclassical growth model for the relationship between current and future cross-country output differences.  Second, we identify how the cross-section and time series approaches relate to these definitions.  Cross-section tests are shown to be associated with a weaker notion of convergence than time series tests.  Third, we show how these alternative approaches make different assumptions on whether the data are well characterized by a limiting distribution.  As a result, the choice of an appropriate testing framework is shown to depend on both the specific null and alternative hypotheses under consideration as well as on the initial conditions characterizing the data being studied.
ER  -