Analysing Convergence through the Distribution Dynamics Approach: Why and How?

Abstract

The convergence hypothesis has stimulated a heated debate within the growth literature. The present paper compares the two most commonly adopted empirical approaches, the regression approach and the distribution dynamics approach, and argues that the former fails to uncover important features of the dynamics that might characterise the convergence process. Next, it provides an in depth description of the features and underlying assumptions of the distribution dynamics approach as well as a detailed discussion of some important aspects related to the estimate of stochastic kernels via kernel density estimators. Finally, the empirical section allows to emphasises the interpretational advantages stemming from the use of stochastic kernels to capture the evolution of the entire crosssectional income distribution. Incidentally, through a comparison between the results obtained from alternative sets of Italian regions, it suggest that the use of administrative regions could lead to ambiguous results.

Economic and Social Convergence in Colombia

“…Magrini (2007) points out that the distribution dynamics approach proposed by Quah (1993aQuah ( and b, 1996aQuah ( , b and c, and 1997 explicitly contends the -convergence point of view and expands it with the use of stochastic kernels to capture the time evolution of the behaviour of the entire cross-sectional distribution of a variable. We briefly present some concepts needed for our estimation for the distributional approach.…”

“…As our main aim is to analyse convergence and growth patterns in socio-economic variables, we inspect all possible techniques and sources of convergence to obtain robust results (see Magrini, 2007, Table 1.…”

The Effect of Immigration on Convergence Dynamics in the US

“…others Durlauf and Quah, 1999;Temple, 1999;Islam, 2003;Magrini, 2004Magrini, , 2009Durlauf et al, 2005). In our view, its most important drawback relates to the lack of informative content: concentrating on the behavior of a representative economy, the best this approach can do is to describe how this economy converges to its own steady-state; it is however completely silent on what happens to the entire cross-sectional distribution of economies.…”

Distribution Dynamics in the US. A Spatial Perspective

“…spatial dependence is seen as a nuisance element that should be eliminated in order to avoid the risk of losing the statistical properties of the estimates (Anselin, 2002 and2009). …”

“…For discussions about the merits of the approach relative to alternative ones and, in particular, to -convergence see, among others, Durlauf and Quah, 1999;Islam, 2003;Magrini, 2004 and2009;Durlauf et al, 2005. function…”