Recent tests for the convergence hypothesis derive from regressing average growth rates on initial levels: a negative initial coefficient is interpreted as convergence. These tests turn out to be plagued by Galton's classical fallacy of regression towards the mean. Using a dynamic version of Galton's fallacy, I establish that coefficients of arbitrary signs in such regressions are consistent with an unchanging cross-section distribution of incomes. Alternative, more direct empirics used here show a tendency for divergence, rather than convergence, of cross-country incomes.

Galton's Fallacy and Tests of the Convergence Hypothesis (Now published in Scandinavian Journal of Economics 95 (4), 1993, pp.427-443.)

The study of club convergence has been a major focus in the field of economic growth and development. The paper analyses the club convergence hypothesis going beyond the traditional use of GDP per capita. In this study, we attempt to analyze the convergence club of 102 countries based on augmented index for measuring development. This index consists of seven major indicator of development namely education, health, access to water and sanitation, energy use, environment, standard of living and good governance. These indicators are aggregated through weights obtained from Principal Component Analysis (PCA). Using this index of development we analyzed the club formation and transitional behavior of 102 countries over a period of 1996–2015. The study confirms four final club and shows transition during 2008. Further, to understand the determinant of the club membership we used ordered logit model. The result suggested that initial level of development and globalisation are the major drives in determining the club.

Testing club convergence of economies by using a Broad-Based Development Index

The present paper aims: on the one hand, to investigate the impact of public service delivery, corruption and inequality on North African migration to developed countries; and on the other hand, to zoom in on the role of education and good governance in mitigating migration flows from North African countries (Algeria, Egypt, Morocco, and Tunisia) over the period 1996–2015, by using pooled OLS regression, fixed-effect and random effect models. The main findings indicate that higher inequality is expected to stimulate migration from North Africa to the developed world. The results also show that enhancing government effectiveness and widening access to good-quality basic services negatively influence North African people’s migration decisions. In fact, rampant inequality and failure to scale up public service delivery bring about a worsening of living conditions and serve as repellent factors in North African sending countries. Furthermore, political stability and control of corruption tend to negatively affect North African migration to developed countries. To sum up, enhancing North African countries’ governance capabilities, alleviating inequality, ensuring broad access to high-quality public services, and cracking down on corruption, will undoubtedly bring tangible benefits, open up more opportunities for people and reduce incentives for migration.

Public service delivery, corruption and inequality: key factors driving migration from North Africa to the developed world

This study investigates disparities in healthcare services in the districts of Uttar Pradesh, the most populous and one of the poorest states of India in the health sector. To measure the disparities in healthcare services, a composite index has been computed using Principal Component Analysis in three domains namely, health availability, health amenities and health affordability and 12 representative indicators. On the basis of the results, districts have been clubbed into five categories, such as high, high-medium, medium, medium–low and low according to their composite scores. The study also uses k-means cluster analysis to find out the set of districts which are similar within the group, but they are different between the groups. Key results indicate that the districts of the western region are more developed in comparison to the districts of the eastern region in terms of three indices such as availability, amenities, affordability of healthcare services and overall composite health index. Also, k-means cluster analysis shows that there are many districts which are identical in many respects; however, they are located in different regions of the state. This study may be helpful to understand the poor availability and affordability of healthcare services in the districts of Uttar Pradesh, which should be improved to meet the objectives of the basic-needs approach and the millennium development goals.

Regional disparities in healthcare services in Uttar Pradesh, India: a principal component analysis

This paper attempts to identify club convergence using the procedure suggested by Phillips and Sul (Phillips and Sul, Econometrica 75:1771–1855, 2007, Phillips and Sul, J Appl Economet 24:1153–1185, 2009) based on GDP per capita for 102 countries across the globe for the time period 1996 through 2015. The results indicate the presence of five clubs with four countries belonging to the non- convergent group. After identifying the clubs, the study analyzed the transitional behaviors among the clubs. Finally, to understand the determinant of the club membership, we used the ordered logit model by considering the initial level of GDP, gross capital formation, growth rate of population, and four indices, namely social, governance, sustainability, and globalization as the explanatory variables. The results suggest that the initial level of GDP per capita, gross capital formation, social, governance, sustainability, and globalization are the major factors for determining the club.

Analysis of club convergence for economies: identification and testing using development indices

Measurement of development is important for economists, academicians and policy makers as it deals with broader issues such as satisfaction of basic human needs and goals, well-being, environment protection and of course economic growth. There have been several attempts to construct various indices for measuring development ever since the use of growth in GDP was found to be inadequate. While the use of composite indices was a significant step in this direction, the existing ones are widely criticized on its limited scope while capturing the various dimensions of development process. Moreover, they also lacked in its methodology of aggregation and weighting scheme, where equal weights for its components were taken in most of the cases. In this study, we make an attempt to construct a broad-based development index (BBDI) capturing the overall development process under various dimensions such as society, sustainability, economy and institutions. Apart from its wide coverage, our index is also different from the existing ones in terms of its weighting, where we have used principal component analysis for deriving the variable weights. BBDI is then aggregated for 102 countries measuring their development process from 1996 through 2015.

Broad-based index for measurement of development

The role of currency in the functioning of the global economy is undeniably of utmost importance to people and governments, whose trust in monetary authorities is the sole provider of value to most of the world’s money which is in the form of fiat currencies. An alternative means of value exchange called cryptocurrencies operating entirely through the internet has the potential to dilute public trust in fiat currencies due to many advantages including fiscal decentralization among others. This study examines the relationship between key macroeconomic variables namely bond prices, dollar exchange rates and the price of gold and its derivatives and cryptocurrency trading in the Indian context. The daily frequency data is collected after the Indian Supreme Court’s judgement in March 2020 which overturned a ban on cryptocurrencies which was imposed before it. We aggregated the data using Principal Component Analysis and examined the short-run and long-run relationship between the variables and cryptocurrency trading using Toda Yamamoto Granger Causality Tests and ARDL Error Correction Model. The results reveal valuable insights about public perception of cryptocurrencies either as an investment asset or as a medium of exchange by examining the significance of individual independent variables in both the long and short run.

https://ojs.wiserpub.com/index.php/UJFE/article/download/1880/1472

Sayel Basel

Papers

Testing club convergence of economies by using a Broad-Based Development Index

Broad-based index for measurement of development

A Study on the Effect of Precious Commodity Prices and Macroeconomic Fluctuations on Cryptocurrency Trading in India