TY - JOUR
T1 - Pairwise output convergence in selected countries of East Asia and the Pacific : an application of Stochastic Unit Root test
AU - Chowdhury, Khorshed
AU - Mallik, Girijasankar
PY - 2011
Y1 - 2011
N2 - This paper examines time series cross-country output convergence in eleven counties of East Asia and the Pacific. Specifically, we model the cross-country output differences as a Stochastic Unit Root (STUR) processes. Using the output-differences between Japan (reference country) and the other ten sampled countries, we find output convergence only for the Japan–Australia, Japan–New Zealand, Japan–Taiwan and Japan–Thailand country-pairs. Alternatively, using the output-differences between Australia (reference country) and the other ten sampled countries, we fail to find any evidence of convergence in seven country pairs of the sampled countries except for Australia–Japan, Australia–Hong Kong and Australia–New Zealand country pairs. Overall, our results do not support output convergence in a broader perspective but support the notion of “club convergence” among a small subset (30–40 per cent) of similar fast-growing economies. The causes for non-convergence of per capita real GDP for a majority of country pairs are an empirical issue that involves country-specific factors that render output gaps highly persistent, but we can broadly outline a few reasons for non-convergence and these include, low and unequal economic growth, lack of economic and financial integration among the sampled countries.
AB - This paper examines time series cross-country output convergence in eleven counties of East Asia and the Pacific. Specifically, we model the cross-country output differences as a Stochastic Unit Root (STUR) processes. Using the output-differences between Japan (reference country) and the other ten sampled countries, we find output convergence only for the Japan–Australia, Japan–New Zealand, Japan–Taiwan and Japan–Thailand country-pairs. Alternatively, using the output-differences between Australia (reference country) and the other ten sampled countries, we fail to find any evidence of convergence in seven country pairs of the sampled countries except for Australia–Japan, Australia–Hong Kong and Australia–New Zealand country pairs. Overall, our results do not support output convergence in a broader perspective but support the notion of “club convergence” among a small subset (30–40 per cent) of similar fast-growing economies. The causes for non-convergence of per capita real GDP for a majority of country pairs are an empirical issue that involves country-specific factors that render output gaps highly persistent, but we can broadly outline a few reasons for non-convergence and these include, low and unequal economic growth, lack of economic and financial integration among the sampled countries.
UR - http://handle.uws.edu.au:8081/1959.7/536631
U2 - 10.1355/ae28-1a
DO - 10.1355/ae28-1a
M3 - Article
SN - 0217-4472
VL - 28
SP - 1
EP - 15
JO - ASEAN Economic Bulletin
JF - ASEAN Economic Bulletin
IS - 1
ER -