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What color in the heat map indicates divergence?
What color in the heat map indicates divergence?
According to Sala-i-Martin, what is the standard speed of convergence observed from the data?
According to Sala-i-Martin, what is the standard speed of convergence observed from the data?
What year marks the latest available data for the PWT growth rates?
What year marks the latest available data for the PWT growth rates?
In the context of growth rates, how are the Maddison and PWT data adjusted?
In the context of growth rates, how are the Maddison and PWT data adjusted?
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What is the convergence rate estimated for rich countries that were open throughout the 1970-1989 period according to Sachs and Warner?
What is the convergence rate estimated for rich countries that were open throughout the 1970-1989 period according to Sachs and Warner?
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What effect does the selection of the latest available year as the terminal date have on the convergence pattern?
What effect does the selection of the latest available year as the terminal date have on the convergence pattern?
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What estimate did Barro provide regarding the speed of convergence based on a longer historical exercise?
What estimate did Barro provide regarding the speed of convergence based on a longer historical exercise?
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Which economies are indicated to have a convergence magnitude of just over two percent for open economies?
Which economies are indicated to have a convergence magnitude of just over two percent for open economies?
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What was the ratio of U.S. to Indian per capita GDP by 2017?
What was the ratio of U.S. to Indian per capita GDP by 2017?
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What does the Solow growth model predict about poor countries compared to rich ones?
What does the Solow growth model predict about poor countries compared to rich ones?
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Which of the following best describes the absence of unconditional convergence in earlier research?
Which of the following best describes the absence of unconditional convergence in earlier research?
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Which factors were explored to potentially recover conditional convergence?
Which factors were explored to potentially recover conditional convergence?
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What is referred to as σ-convergence in economic growth literature?
What is referred to as σ-convergence in economic growth literature?
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What key observation has been documented since the mid-1990s regarding economic growth?
What key observation has been documented since the mid-1990s regarding economic growth?
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Which region has been noted for its exceptional economic performance since the 1960s and 1970s?
Which region has been noted for its exceptional economic performance since the 1960s and 1970s?
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What does the literature suggest about the growth patterns of poorer countries relative to richer countries?
What does the literature suggest about the growth patterns of poorer countries relative to richer countries?
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What was the conclusion regarding middle-income countries and their growth rates post-1985?
What was the conclusion regarding middle-income countries and their growth rates post-1985?
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What does the standard deviation measure in the context of within-country growth patterns?
What does the standard deviation measure in the context of within-country growth patterns?
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According to the findings, how did growth volatility change across different income groups?
According to the findings, how did growth volatility change across different income groups?
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What phenomenon do Pritchett and Summers (2014) associate with growth slowdowns in middle-income countries?
What phenomenon do Pritchett and Summers (2014) associate with growth slowdowns in middle-income countries?
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How has the stability of within-country growth volatility been characterized for rich countries?
How has the stability of within-country growth volatility been characterized for rich countries?
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How did the time frame for calculating the standard deviation of within-country growth change from 1960 onwards?
How did the time frame for calculating the standard deviation of within-country growth change from 1960 onwards?
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Which of the following best describes the growth advantages of middle-income countries during the post-war period?
Which of the following best describes the growth advantages of middle-income countries during the post-war period?
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What is a characteristic of growth patterns observed in poor countries?
What is a characteristic of growth patterns observed in poor countries?
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What does the β parameter reflect in terms of economic convergence?
What does the β parameter reflect in terms of economic convergence?
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What does the equation τ = − ln (2) / ln(1 − e−βs) represent?
What does the equation τ = − ln (2) / ln(1 − e−βs) represent?
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Based on the analysis for 2000-2019, what was the estimated β parameter?
Based on the analysis for 2000-2019, what was the estimated β parameter?
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What does σ-convergence indicate?
What does σ-convergence indicate?
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Which of the following statements is true regarding β-convergence and σ-convergence?
Which of the following statements is true regarding β-convergence and σ-convergence?
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What did the analysis from 1960-2000 and 2000-2019 reveal about economic convergence?
What did the analysis from 1960-2000 and 2000-2019 reveal about economic convergence?
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What trend has been observed regarding σ-convergence since the 2008 Global Financial Crisis?
What trend has been observed regarding σ-convergence since the 2008 Global Financial Crisis?
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What does a longer half-life imply about the speed of economic convergence for developing countries?
What does a longer half-life imply about the speed of economic convergence for developing countries?
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What significant change in growth persistence is observed after the 1970s for high- and middle-income countries?
What significant change in growth persistence is observed after the 1970s for high- and middle-income countries?
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Which income group's growth persistence has become less stable during the era of convergence?
Which income group's growth persistence has become less stable during the era of convergence?
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What did Easterly et al. (1993) contribute to the understanding of cross-country growth variance?
What did Easterly et al. (1993) contribute to the understanding of cross-country growth variance?
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What is the effect of middle-income countries on growth persistence relative to other income groups?
What is the effect of middle-income countries on growth persistence relative to other income groups?
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How has the relationship between income and growth persistence changed since the 1960s?
How has the relationship between income and growth persistence changed since the 1960s?
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What does the analysis suggest about the convergence rate ($eta$) during the era of convergence?
What does the analysis suggest about the convergence rate ($eta$) during the era of convergence?
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What does the Pearson correlation coefficient ($
ho$) measure in the context of growth persistence?
What does the Pearson correlation coefficient ($ ho$) measure in the context of growth persistence?
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What was a surprising outcome noted regarding growth rates in low- and high-income countries?
What was a surprising outcome noted regarding growth rates in low- and high-income countries?
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Study Notes
Economic Growth Dynamics
- By 2017, the U.S. to Indian per capita GDP ratio fell to 9:1, indicating a significant shift in relative economic performance.
- Unconditional divergence, previously a prominent trend in cross-country growth analysis, has reversed, showcasing unconditional convergence since the mid-1990s.
Growth Models and Findings
- The Solow growth model suggests poor countries should grow faster than rich ones due to higher marginal returns on capital but empirical data has often contradicted this.
- Studies, starting with Barro (1991), found no statistically significant evidence of convergence; poorer countries do not inherently grow faster than wealthier ones over extended time frames.
Convergence Literature
- Research from scholars like Pritchett, Rodrik, Johnson, and Papageorgiou explored factors influencing conditional convergence, linking growth to human capital, investment, and trade.
- Non-linear models, such as the concept of convergence clubs, suggest varying growth patterns among countries.
Recent Trends and Performance
- Since the 1990s, a select group of developing countries, particularly in East Asia, has shown significant economic improvement, contributing to the new trend of unconditional convergence.
- Heat maps used in regression analysis illustrate that convergence patterns remain consistent even when accounting for different time frames, particularly post-financial crisis.
Speed of Convergence
- The average speed of convergence is estimated around 2% according to Sala-i-Martin (1996) and approximately 1.7% according to Barro (2015).
- For the period of 2000-2019 across 124 countries, the β parameter was estimated at .00425, suggesting a half-life for catch-up of about 170 years, indicating slow convergence despite trends toward convergence.
Analyzing Convergence Causes
- Convergence may result from both reduced performance in rich countries and rising growth rates in poorer nations post-1990s.
- Statistical analyses show that middle-income countries have begun to grow faster than others, contradicting earlier notions of a middle-income trap.
Volatility and Growth Persistence
- Within-country growth volatility is low and stable in rich countries, whereas it remains high in poorer countries, although volatility in low- and middle-income countries has declined since the convergence era.
- Growth persistence has shifted; middle-income countries now exhibit greater stability in growth rates compared to high- and low-income nations, which experienced reduced persistence.
Implications of Middle-Income Dynamics
- The observed lack of a middle-income trap suggests that growth rates for middle-income countries are becoming more sustainable, supporting the overall convergence narrative and indicating a shift in economic dynamics across different income classifications.
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Description
Explore the dynamics of economic growth through the lens of various growth models and empirical findings. This quiz covers the shift in GDP ratios between the U.S. and India, the concept of unconditional convergence, and insights from key scholars in the field.
