DETERMINISTIC, STOCHASTIC, AND SEGMENTED TRENDS IN AGGREGATE OUTPUT -A CROSS-COUNTRY ANALYSIS

This paper examines whether output per capita in 126 countries is bett er described as trend or difference stationary, using appropriate fini te-sample critical values. Depending upon whether one uses solely a te st with a trend stationary null, or solely one with a difference stati onary null, very different conclusions are obtained. This outcome sugg ests that it is useful to consider the tests complementary, rather tha n competing. We find that when a definite characterization of GDP can be made, it is very likely to indicate a difference stationary process . However, the likelihood of making definite conclusions does vary pos itively with both income level and data quality.