EMPIRICS FOR ECONOMIC-GROWTH AND CONVERGENCE

The convergence hypothesis has generated a huge empirical literature: this paper critically reviews some of the earlier key findings, clarif ies their implications, and relates them to more recent results. Parti cular attention is devoted to interpreting convergence empirics. The m ain findings are: (1) The much-heralded uniform 2% rate of convergence could arise for reasons unrelated to the dynamics of economic growth. (2) Usual empirical analyses - cross-section (conditional) convergenc e regressions, time-series modelling, panel data analysis - can be mis leading for understanding convergence; a model of polarization in econ omic growth clarifies those difficulties. (3) The data, more revealing ly modelled, show persistence and immobility across countries: some ev idence supports Baumol's idea of 'convergence clubs'; some evidence sh ows the poor getting poorer, and the rich richer, with the middle clas s vanishing. (4) Convergence, unambiguous up to sampling error, is obs erved across US states.