Pairwise output convergence in selected countries of East Asia and the Pacific: an application of Stochastic Unit Root test
RIS ID
37116
Abstract
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 JapanAustralia, JapanNew Zealand, JapanTaiwan and JapanThailand 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 AustraliaJapan, AustraliaHong Kong and AustraliaNewZealand 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 (3040 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.
Publication Details
Chowdhury, K. & Mallik, G. (2011). Pairwise output convergence in selected countries of East Asia and the Pacific: an application of Stochastic Unit Root test. ASEAN Economic Bulletin, 28 (1), 1-15.