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This paper finds club convergence within the 50 U.S. states using the Phillips and Sul regression-based convergence test with per capita real state domestic product from 1997 to 2017. Two clubs wit...

To study the role of financial development in economic growth, we apply an array of convergence tests designed to capture nonlinear transitional dynamics to real outputs per capita. Strong evidence of multiple convergence clubs is observed, implying that the clubs are formed based on the initial level of real output per capita and average growth rate. Our empirical results show that the stage of economic growth of each country plays an important role for the composition of the convergence clubs. Furthermore, financial development emerges to be a significant determinant, albeit plays differently in the economic growth of each convergence club.

Our analysis of 19 Organization for Economic Co-operation and Development (OECD) countries over the period 1972 to 2006 provides evidence of convergence in per capita health care expenditures for 17 countries, while the US and (to a lesser degree) Norway follow a different path. A simple decomposition of per capita health expenditures reveals that the divergence of the US comes from the divergence of the ‘ratio of health care expenditures to Gross Domestic Product (GDP)’ component, while Norway's divergence is mainly caused by the ‘labour productivity’ component. Interestingly, our results suggest that convergence in per capita health expenditures among the 17 OECD countries does not lead to convergence in health outcomes. Finally, we extend our analysis to examine convergence in various determinants of health expenditures.

This article analyses the evolution of relative per capita income distribution of Brazilian municipalities over the period 1970–1996. Analyses are based on non-parametric methodologies and do not assume probability distributions or functional forms for the data. Two convergence tests have been carried out – a test for sigma convergence based on the bootstrap principle and a beta convergence test using smoothing splines for the growth regressions. The results obtained demonstrate the need to model the dynamics of income for Brazilian municipalities as a process of convergence clubs, using the methodology of transition matrices and stochastic kernels. The results show the formation of two convergence clubs, a low income club formed by the municipalities of the North and Northeast regions, and another high income club formed by the municipalities of the Center-West, Southeast and South regions. The formation of convergence clubs is confirmed by a bootstrap test for multimodality.

The increasing diversity of average growth rates and income levels across countries has generated a large literature on testing the income convergence hypothesis. Most countries in South-East Asia, particularly the five founding ASEAN member countries (ASEAN-5), have experienced substantial economic growth, with the pace of growth having varied substantially across countries. Recent empirical studies have found evidence of several convergence clubs, in which per capita incomes have converged for selected groupings of countries and regions. This paper applies different time series tests of convergence to determine if there is a convergence club for ASEAN-5, as well as ASEAN-5 and the USA. The catching up hypothesis states that the lagging country, with low initial income and productivity levels, will tend to grow more rapidly by copying the technology of the leader country, without having to bear the associated costs of research and development. Given the important effects of technological change on growth, this paper also examines whether ASEAN-5 is catching up technologically to the USA.

Given the development of time series econometrics and nonstationary data analysis, St. Aubyn (Empirical Economics, 24, 23–44, 1999) demonstrates a new paradigm for testing income convergence, or better defined, income stability, namely testing the stationarity of pair-wise income differentials. In this paper, a panel data set of Sub-Saharan African countries is constructed and panel cointegration and unit root tests are used to investigate the convergence properties of incomes and standards of living within Africa. Overall, little evidence is found to substantiate claims of convergence across Africa, although in some cases, smaller convergence clubs within Africa may be found. In addition the use of nonstationary panel data techniques is proposed for the testing and establishing of coherent convergence clubs.