Convergence in Public Expenditure Across a Sample of Emerging Countries: Evidence from Club Convergence

Abstract

The goal of this article is to investigate convergence in public expenditure for a panel of nineteen emerging countries spanning the period 1990–2012. The study applies the methodology of the club convergence methodology to various categories of public expenditure to assess the presence of convergence clubs. I consider eleven alternative categories of public expenditure. The results do not support the hypothesis that all emerging countries converge to a single equilibrium state in public expenditure. Countries demonstrate a high degree of convergence in the sense that in the majority of the cases, these expenditures form only two or three convergence clubs.

KEY WORDS:

• club convergence approach
• convergence
• emerging markets
• public expenditure

Acknowledgments

The author thanks three referees for providing valuable comments that improved the quality of the article. The author also thanks Donggyu Sul for making the Gauss code available to us. A sample code can be downloaded from Donggyu Sul’s homepage (http://www.utdallas.edu/~dxs093000/). The usual disclaimer applies.

Notes

1. Our data series are trending; therefore, we apply the Phillips and Sul (2007) methodology on the trend components of the series, which are extracted using the Hodrick–Prescott filter.