Convergence dynamics of output: Do stochastic shocks and social polarization matter? - Université de Lorraine Access content directly
Journal Articles Economic Modelling Year : 2013

Convergence dynamics of output: Do stochastic shocks and social polarization matter?

Mamata Parhi
  • Function : Author
Claude Diebolt
Tapas Mishra
  • Function : Author
Prashant Gupta
  • Function : Author
  • PersonId : 1144229

Abstract

This paper seeks to address two neglected aspects of convergence dynamics of cross-country per capita income. First, we allow evolutionary path of per capita income to contain stochastic shocks which may not converge fast enough to the long-run mean. Under this condition, we show that the conventional inference on σ convergence can be enlarged with more predictive power if one assumes, along with the necessary condition of β convergence, that the stochastic shocks are covariance stationary. Second, we argue that for economies to (conditionally) converge, they need to be sufficiently cohesive so that the growth of stochastic shocks is not sustained through complex socio-economic interactions. Empirical examination is carried out by analyzing time series properties of state per capita income in India and performing convergence analysis by conditioning a constructed social cohesion index based on indicators collected from the National Sample Survey. It is demonstrated that when the economy faces monotonic social segmentation, persistence of stochastic shocks considerably affects speed of per capita output convergence.
Fichier principal
Vignette du fichier
AFC_WP_10-2012.pdf (409.05 Ko) Télécharger le fichier
Origin : Files produced by the author(s)
Licence : CC BY NC - Attribution - NonCommercial

Dates and versions

hal-01753438 , version 1 (27-04-2023)

Licence

Attribution - NonCommercial - NoDerivatives

Identifiers

Cite

Mamata Parhi, Claude Diebolt, Tapas Mishra, Prashant Gupta. Convergence dynamics of output: Do stochastic shocks and social polarization matter?. Economic Modelling, 2013, 30, pp.42-51. ⟨10.1016/j.econmod.2012.09.034⟩. ⟨hal-01753438⟩
45 View
14 Download

Altmetric

Share

Gmail Facebook X LinkedIn More