Article

The Convergence Debate and Econometric Approaches: Evidence from India

Samarjit Das

in The Oxford Handbook of the Indian Economy

Published in print March 2012 | ISBN: 9780199734580
Published online November 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199734580.013.0026

Series: Oxford Handbooks

 The Convergence Debate and Econometric Approaches: Evidence from India

More Like This

Show all results sharing these subjects:

  • Economics
  • Economic Development and Growth
  • Public Economics

GO

Show Summary Details

Preview

This article notes that the econometric literature on convergence has been critical of traditional growth regressions for studying economic convergence across countries and regions, based on the popular notions of β and ó convergences. This is because these methods fail to allow for unobserved (and persistent) differences across countries, and they are susceptible to measurement errors, endogeneity biases, and spatial autocorrelation. The article does two things: First, it investigates the convergence hypothesis among Indian states by using panel unit root tests that explicitly incorporate cross-sectional dependence (various socioeconomic variables in different regions in India are expected to be contemporaneously correlated). Second, two measures of well-being are used: per capita consumption—both rural and urban—and per capita state-level GDP (SGDP). Most of the studies on India are based on SGDP, which is a questionable indicator of welfare. The article also incorporates possible structural breaks that may occur and may lead to completely different outcomes of the convergence hypothesis test.

Keywords: econometrics; convergences; cross-sectional dependence; per capita consumption; state-level GDP; structural breaks

Article.  6232 words. 

Subjects: Economics ; Economic Development and Growth ; Public Economics

Full text: subscription required

How to subscribe Recommend to my Librarian

Buy this work at Oxford University Press »

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.