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Real convergence in Latin America: a fractionally integrated approach

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Abstract:

This letter investigates the real convergence of 17 Latin American countries to the US economy for the period 1950 to 2008. We examine the order of integration of real Gross Domestic Product (GDP) per capita differences between the US and each Latin American country. We allow for fractional degrees of differentiation. This approach provides a test for stochastic convergence, which is a necessary condition for real convergence. The results show no evidence of stochastic convergence with respect to the US economy in any of the countries under study.

Keywords: C22; E19; beta convergence; fractional integration; mean reversion; real convergence

Document Type: Research Article

DOI: https://doi.org/10.1080/09603107.2012.674204

Affiliations: 1: School of Business,Universidad Francisco Marroquín, Edificio de la Escuela de Negocios, 6 Calle FinalZona 10, 01010, Guatemala 2: School of Economics and Business Administration,Universidad de Navarra, Edificio Bibliotecas-Este, 31080, Pamplona, Spain

Publication date: 2012-10-01

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