Abstract
We evaluate the empirical evidence regarding stochastic convergence in income across a group of 29 countries. Our results are based on a new unit root test developed by Popp (Citation2008) that estimates the break-date more accurately and does not suffer from size distortions in the presence of a break. Our results reveal considerably less evidence of stochastic convergence compared with previous studies.
Notes
1Details regarding the Perron-type unit root tests can be found in Perron (Citation1997).
2Popp (Citation2008) and Costantini and Sen (Citation2010) provided finite sample simulation evidence that highlights these two properties of Popp's unit root tests.