This paper investigates international output convergence using methods of panel data
unit root testing advocated by Im et al. (1997) and Breuer et al. (1999). Using
quarterly data for a sample of OECD economies for the period 1960-98 on GDP
differentials, the evidence suggests that power deficiency may be an issue where
univariate ADF unit root tests find against convergence with respect to the US or
Germany. However, while the Im et al. t-bar test offers strong evidence in favor of
convergence, the Breuer et al. SURADF test suggests that this finding may in fact be
driven by the rejection of non-stationarity in a small number of cases.
This is Business Cycle Volatility and Economic Growth Research Report No. 00/6.
This paper forms part of the ESRC funded project (Award No. L1382511013)
“Business Cycle Volatility and Economic Growth: A Comparative Time Series
Study”, which itself is part of the Understanding the Evolving Macroeconomy