Growing Apart? Australia and New Zealand growth experiences, 1870–1993

Abstract

The paper uses a recently created annual per capita income series for New Zealand, 1870–1993 to consider the existence of convergence between New Zealand and Australia. The results show that the New Zealand GDP per capita series is integrated of order 1, I(1), and neither a single or joint break overturns the null of a unit root. Based on the time series properties of Australian data described in Oxley and Greasley (1995) this result for the New Zealand data is incompatible with her belonging to a trans‐Tasman Convergence Club. A conjunction of smaller size, more insular economic policies, and a less favourable resource endowment distinguishes New Zealand's economic development from Australia's.

Notes

We wish to acknowledge the support of the Marsden Fund under grant UOW803 that aided completion of this paper. This is a revised version of a paper presented at the February 1999 Meeting of the New Zealand Econometric Study Group. Comments received both during and after that presentation are gratefully acknowledged especially those from Adrian Pagan and John Gibson. Usual caveats apply.