Are poor countries above their steady-state income levels? – A time-series analysis
Liu, Xiaoxiao

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Liu, X. (2005, October). Are poor countries above their steady-state income levels? – A time-series analysis (Dissertation, Bachelor of Commerce with Honours). Retrieved from http://hdl.handle.net/10523/1217
Permanent link to OUR Archive version:
http://hdl.handle.net/10523/1217
Abstract:
This paper criticizes Cho and Graham's argument that poor countries converge from above their steady-state income levels, based on their misspecification of formulating the steady-state income by omitting the variation in the base period technology across countries when estimating steady-state income. This paper also questions the cross-country regression methodology, which generally ignores the changes in variables over time. A time-series approach is employed to analyse the long-run behaviour of actual and steady-state income levels for a group of seven developing countries, which are observed to be above their steady-states in Cho and Graham (1996). An error-correction-based-test is used to examine the existence of cointegration. The results suggest that these countries' actual and steady-state income per capita tend to move together over time, which is consistent with the Solow model's prediction.
Date:
2005-10
Degree Name:
Bachelor of Commerce with Honours
Degree Discipline:
Economics
Pages:
58
Keywords:
steady-state income levels,
poor countries; steady-state income; cross-country regression methodology; steady-state income per capita; time-series analysis; economic growth and applied econometrics; growth,
convergence,
steady-state income levels,
base period technology,
cross-country regression,
time-series regression,
Solow model's prediction,
error-correction-based-test
Research Type:
Dissertation
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- Economics [318]
- Dissertation - Honours [188]