Classical and technological convergence:beyond the Solow-Swann model

Recent investigations into cross-country convergence follow Mankiw, Romer, and Weil (1992) in using a log-linear approximation to the Swan-Solow growth model to specify regressions. These studies tend to assume a common and exogenous technology. In contrast, the technology catch-up literature endogenises the growth of technology. The use of capital stock data renders the approximations and over-identification of the Mankiw model unnecessary and enables us, using dynamic panel estimation, to estimate the separate contributions of diminishing returns and technology transfer to the rate of conditional convergence. We find that both effects are important.

Inflation convergence in Europe

Convergence has been a popular theme in applied economics since the seminal papers of Barro (1991) and Barro and Sala-i-Martin (1992). The very notion of convergence quickly becomes problematic from an academic viewpoint however when we try and formalise a framework to think about these issues. In the light of the abundance of available convergence concepts, it would be useful to have a more universal framework that encompassed existing concepts as special cases. Moreover, much of the convergence literature has treated the issue as a zero-one outcome. We argue that it is more sensible and useful for policy decision makers and academic researchers to consider also ongoing convergence over time. Assessing the progress of ongoing convergence is one interesting and important means of evaluating whether the Eastern European New Member Countries (NMC) of the European Union (EU) are getting closer to being deemed “ready” to join the European Monetary Union (EMU), that is, fulfilling the Maastricht convergence criteria.