GROWTH EMPIRICS - A PANEL-DATA APPROACH

A panel data approach is advocated and implemented for studying growth convergence. The familiar equation for testing convergence is reformu lated as a dynamic panel data model, and different panel data estimato rs are used to estimate it. The main usefulness of the panel approach lies in its ability to allow for differences in the aggregate producti on function across economies. This leads to results that are significa ntly different from those obtained from single cross-country regressio ns. In the process of identifying the individual ''country effect,'' w e can also see the point where neoclassical growth empirics meets deve lopment economics.