Output Convergence and the Role of Research and Development

Mohammad Ashraf () and Khan Mohabbat
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Khan Mohabbat: Department of Economics Northern Illinois University DeKalb, IL

Annals of Economics and Finance, 2010, vol. 11, issue 1, 35-71

Abstract: We ask whether failure to control for research and development (R&D) activity in an output convergence regression affects the coefficient estimates of initial output. We focus on output convergence to an economy¡¯s own steady-state growth path using time series regression framework and convergence across economies using panel estimation. We use data for the 30 member countries of the Organization for Economic Co-operation and Development (OECD) and US state-level real per capita output and per capita patents. The results indicate that after controlling for R&D activity the coefficient estimates increase in magnitude (in absolute terms) and in significance levels. Furthermore, the results are not sensitive to the dataset used or the estimation procedure.

Keywords: Output convergence; R&D; Omitted variable bias; Panel estimation; Panel unit root tests (search for similar items in EconPapers)
JEL-codes: O11 O30 O47 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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