Abstract
Cross-section and time series studies of convergence generally have led to opposite conclusions about the convergence hypothesis. The methodologies employed in these studies suffer certain conceptual or statistical weaknesses. In this study, an entirely different approach is taken. The analytics of convergence is modeled using differential equations and the necessary and sufficient condition for absolute (steady state) convergence is derived. While our results reject absolute convergence for the OECD nations in a differential equation-time only model and in a differential equation model with capital accumulation and time as arguments, we find evidence of relative convergence with a weaker differential equation model.
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