The New Era of Unconditional Convergence

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Questions and Answers

Match the authors with their affiliated institutions:

Dev Patel = Harvard University Justin Sandefur = Center for Global Development Arvind Subramanian = Ashoka University Doug Irwin = Not specified

Match the terms with their definitions:

Unconditional convergence = The process where poorer countries grow faster than richer ones Middle-income trap = A situation where a country's growth stagnates at middle-income levels Economic growth = Increase in the production of goods and services over time Volatility = The degree of variation in trading prices over time

Match the publication details with their descriptions:

Working Paper 566 = An identifier for a specific paper in research February 2021 = The date of publication Keywords = Terms that highlight the main topics of the paper JEL = Journal of Economic Literature classification system

Match the main ideas with their context in the paper:

Empirical evidence of growth = Poorest countries catching up Growth moderation = Not primarily responsible for convergence Increasing growth rates = Middle-income countries outperforming others Volatility reduction = A characteristic of developing countries' growth Signup and view all the answers

Match the themes discussed in the paper with their descriptions:

Economic divergence = The previous prevailing trend in global economics Accelerating growth = The observed phenomenon in developing countries Research discussions = Involvement of notable economists Anachronistic views = Outdated perceptions about growth traps Signup and view all the answers

Match the common critiques in economic growth literature with their relevance:

Cross-country convergence = The debate around the growth patterns of countries Middle-income countries = Critics argue about their stagnation High growth rates = A new reality for developing nations Volatile economic conditions = Reduced in developing regions recently Signup and view all the answers

Match the names of economists mentioned with their field of expertise:

Paul Krugman = Economics and international trade Dani Rodrik = Development economics Chris Papageorgiou = Macroeconomic dynamics David Rosnick = Economic forecasting Signup and view all the answers

Match the email addresses with their respective authors:

<a href="mailto:[email protected]">[email protected]</a> = Dev Patel <a href="mailto:[email protected]">[email protected]</a> = Justin Sandefur <a href="mailto:[email protected]">[email protected]</a> = Arvind Subramanian Not specified = Doug Irwin Signup and view all the answers

Match the regions with their provided impact on convergence coefficients:

Africa = Increases convergence coefficient by 0.75 percentage points Asia = Decreases convergence coefficient significantly Latin America = Does not significantly impact convergence coefficient South Asia = Not referenced in the main analysis Signup and view all the answers

Match the periods with their significance in growth literature:

1960-1985 = Focus of earlier growth literature Post-2000 = Displays inverted U-shape growth rates 1990s = Could raise concerns about conflating patterns 21st Century = Characterizes economies in middle-income trap Signup and view all the answers

Match the term with its descriptive context:

Middle-income trap = Economies squeezed between competitors and innovators Convergence coefficient = Reflects growth potential in regions β parameters = Indicators for growth comparison Cyclical swings = Temporal fluctuations affecting long-term patterns Signup and view all the answers

Match the descriptions with their corresponding countries' characteristics:

African countries = On average, poorer than Latin American countries Latin American countries = Possibly richer than Asian countries Asian countries = Significantly impact the convergence rate Developing countries = Generally not catching up in growth Signup and view all the answers

Match the following authors with their respective papers:

Dev Patel = The New Era of Unconditional Convergence Justin Sandefur = Replication Data for Economic Research Arvind Subramanian = The Impact of Economic Policies Center for Global Development = Research Data and Code Disclosure Policy Signup and view all the answers

Match the following terms with their definitions:

Unconditional Divergence = Developing countries falling behind richer nations Per Capita Income = Average income per person in a given area Purchasing-Power Parity = Economic theory that compares different countries' currencies Replication Code = Set of instructions to replicate research findings Signup and view all the answers

Match the following years with their significant income ratios:

1950 = 17 times higher in the U.S. than in India 1990 = 30 times higher in the U.S. than in India 2000 = Changes in global economic trends 2021 = Current discussions on economic disparity Signup and view all the answers

Match the following locations with their descriptions:

L Street NW = Address associated with economic policy research Washington, DC = Location of the Center for Global Development India = A country highlighted in income comparisons United States = A country with a significant income advantage historically Signup and view all the answers

Match the following modes of study with their focus areas:

Economic Research = Study of policies impacting poverty Policy-Making = Developing strategies to address economic issues Dissemination = Sharing of research findings with the public Code Disclosure = Ensuring transparency in data usage Signup and view all the answers

Match the following organizations with their roles:

National Science Foundation = Provides fellowships for research Center for Global Development = Implements economic research for poverty reduction World Bank = Supports development projects globally International Monetary Fund = Provides financial stability and economic advice Signup and view all the answers

Match the following resources with their availability status:

CGD Working Paper 566 = Available for public use Replication Data = Available for research replication Research Data and Code Disclosure Policy = Available online for reference Commercial Usage Rights = Restricted under certain conditions Signup and view all the answers

Match the following terms with their related concepts:

Creative Commons License = Terms for content sharing Economic Policy = Strategies that influence economic growth Global Poverty = Focus area for international development Economic Impact = Effects of policies on wealth distribution Signup and view all the answers

Match the concept with its description:

β-convergence = The rate at which poor countries close the income gap σ-convergence = The reduction in overall variance of per capita GDP Half-life (τ) = Time taken for a country to eliminate half the income gap OECD = Organization of economically developed countries Signup and view all the answers

Match the estimated half-life (τ) with the corresponding β parameter:

τ = 35 years = β from Sala-i-Martin (1996) τ = 170 years = β = 0.00425 for 2000-2019 τ = 50 years = β = 0.014 τ = 100 years = β = 0.00693 Signup and view all the answers

Match the time period with its corresponding convergence trend:

1960-2000 = Evidence of convergence due to improving growth 2000-2019 = Convergence due to declining growth in rich countries Post-1990s = Convergence reflecting poorer country performance 2008 Global Financial Crisis = Impact on σ-convergence Signup and view all the answers

Match the author with their contributions to convergence theories:

Sala-i-Martin = Conditional convergence coefficient De Long = Analysis of OECD performance post-1990s Young et al. = Proof regarding necessary conditions for σ-convergence Unnamed in the text = Empirical evidence for σ-convergence Signup and view all the answers

Match the parameter with its effect on convergence:

High β = Faster convergence of poor countries Low β = Slower convergence of poor countries Standard deviation = Measurement of income distribution variance Unconditional β = Not sufficient for σ-convergence Signup and view all the answers

Match the concept with its implication:

β-convergence is necessary = Does not guarantee reduced income variance σ-convergence is lacking = No meaningful reduction in GDP variance Convergence due to OECD = Rich countries experiencing slowed growth Improving performance in poor countries = Part of the convergence trend Signup and view all the answers

Match the equation with its corresponding variable:

τ = -ln(2) / ln(1−e^(-βs)) = Formula for half-life in convergence β = Rate parameter indicating convergence speed s = Level of steady state income Current income levels = Present economic status of countries Signup and view all the answers

Match the effect with the corresponding economic crisis:

Post-2008 = Impact on σ-convergence not meaningful 2000-2019 = Observed convergence with slower growth in rich nations Pre-2008 = Higher variance across per capita GDP 2008 = Turning point for β and σ convergence dynamics Signup and view all the answers

Match the income groups with their observed growth persistence trends:

High-income countries = More persistent growth until the 1970s Middle-income countries = Most persistent growth in the era of convergence Low-income countries = Less persistent growth with magnitudes similar to high-income countries All income groups = Low levels of growth persistence Signup and view all the answers

Match the authors with their associated insights on growth volatility:

Easterly et al.(1993) = Established that growth rates are highly unstable over time Pritchett and Summers (2014) = Confirmed low persistence of growth over time Discoveries from the 1980s = Noted decline in volatility for middle-income countries Findings from recent studies = Showed relative performance across income groups has changed Signup and view all the answers

Match the time periods with significant changes in growth persistence:

1970s = High-income countries experienced more persistent growth 1980s = Decline in volatility begins for middle-income countries Era of convergence = Low persistence for both low- and high-income countries 1960s = Persistence was a direct function of income Signup and view all the answers

Match the research findings with their implications on growth rates:

Growth in middle-income countries = Contradicts the narrative of a middle-income trap Correlation across decades of growth = Ranges from 0.1 to 0.3 Shocks vs. policy fundamentals = Key role in explaining variance in cross-country growth Modest β during convergence = Suggests slow convergence among income groups Signup and view all the answers

Match the researchers with their contributions to understanding growth patterns:

Easterly et al.(1993) = Highlighted instability in growth rates Pritchett and Summers (2014) = Reaffirmed findings of low growth persistence Economists from the 1980s = Linked decline in volatility to middle-income countries Modern economists = Investigated the ‘middle income trampoline’ concept Signup and view all the answers

Match the observations with the respective income groups:

High-income countries = Growth persistence declined significantly Middle-income countries = Showed most persistent growth rates recently Low-income countries = Were less persistent during the era of convergence All income groups = Exhibited low growth persistence in recent analyses Signup and view all the answers

Match the concepts with their definitions from the text:

Growth persistence = Measuring correlation of growth rates over time Volatility decline = Significant decrease noted in certain income groups Convergence = Process where growth rates among countries become more similar Middle-income trap = Assumption that growth would stagnate at middle-income levels Signup and view all the answers

Match the findings with their contextual implications:

Low-income countries experiencing less volatility = Indicates a shift in growth patterns Middle-income countries' persistent growth = Challenges existing narratives of economic traps Growth instability across decades = Calls for reevaluation of policy impacts Shocks' influence on growth = Highlights the unpredictable nature of economic growth Signup and view all the answers

Study Notes

Economic Growth Convergence

Unconditional divergence, a historical trend, where poor countries lagged behind rich countries, has changed; poorer nations have been catching up since the mid-1990s.
This new convergence results from growth acceleration in developing countries, not from a slowdown in wealthy nations.
Middle-income countries have shown higher growth rates since the mid-1980s, challenging the idea of a "middle-income trap."

Historical Economic Context

In 1950, U.S. per capita income was 17 times that of India; this differential increased to 30 times by 1990.
The growth rate for poorer countries has improved, with significant discussions dating back decades being re-evaluated with recent data.
The β parameter for convergence indicates how quickly countries can close the income gap; for 2000-2019, this parameter is .00425, suggesting a half-life for catch-up of approximately 170 years.

Convergence Trends

Despite signs of convergence, the overall variance in per capita GDP among countries (σ-convergence) has not shown meaningful improvement, with no significant σ-convergence observed post-2008 financial crisis.
Convergence in poorer countries correlates with both increased growth in those countries and decreased growth in richer nations.

Geographic Economic Performance

The African continent has shown a persistent drag on global convergence rates; excluding sub-Saharan Africa increases the convergence coefficient.
In contrast, Asian countries have had a lower convergence coefficient when excluded from the analysis, indicating their faster economic progress.

Middle-Income Trap Analysis

The concept of a "middle-income trap" assumes middle-income nations cannot transition to high-income status; evidence suggests this notion is outdated.
Growth rates for middle-income countries exhibit an inverted U-shape relationship with initial income, indicating healthy growth patterns.
Volatility in growth rates has decreased for both low- and middle-income countries since the 1980s.

Growth Persistence Insights

High-income nations saw growth persistence decline after the 1970s, while middle-income countries now show more stable growth patterns.
Convergence suggests low-income and high-income countries have similarly low levels of growth persistence, contradicting historical trends.
Growth instability persists across all income groups, while middle-income countries stand out for their enhanced growth permanency.

Conclusion on Economic Dynamics

The lack of a middle-income trap supports the idea of continued convergence; countries are increasingly coming out of stagnation.
The narrative around economic convergence is shifting, urging policymakers and researchers to reconsider long-held beliefs about growth trajectories in developing nations.

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Explore the transformative period in economic growth where poorer countries are catching up with wealthier nations. This quiz delves into the evidence and factors contributing to this convergence that has been occurring since the mid-1990s. Understand the implications and the historical context behind this shift.