|Working Paper #42-95|
|Evidence on the Contribution of Trade Reform Towards International Income Equalization|
|Dan Ben-David and Alok K. Bohara|
An examination of the impact of trade reform on the behavior of income differentials among countries provides the setting for the utilization of an income convergence test that differs from the conventional cross-country regressions. The existence, or non-existence, of convergence involves joint estimation of augmented Dickey-Fuller type equations using seemingly unrelated regression (SUR) techniques. Monte Carlo simulations are used to calculate the critical values which are, in turn, used to determine the significance of convergence. The findings here provide support for a link between trade liberalization and income convergence.
|Published in: Review of International Economics, 5, 242-255, May, 1997.|
|Jel Nos.: C2. F43. O1.|
|Keywords: Income Convergence. Trade Liberalization|