CONVERGENCE - INFERENCES FROM THEORETICAL-MODELS

This essay suggests that the convergence controversy may reflect, in p art, differences in perception regarding the viable set of competing t estable hypotheses generated by existing growth theories. It argues th at in contrast to the prevailing wisdom, the traditional neoclassical growth paradigm generates the club convergence hypothesis as well as t he conditional convergence hypothesis. Furthermore, the inclusion of e mpirically significant variables such as human capital, income distrib ution, and fertility in conventional growth models, along with capital markets imperfections, externalities, and non-convexities: strengthen s the viability of club convergence as a competing hypothesis with con ditional convergence.