Which Countries are Catching up? New Evidences Using Flexible Fourier Stationary Test

Abstract

In this paper, we tested the catching-up hypothesis toward the USA using Becker et al. (2006) flexible Fourier KPSS stationary test over the period 1960-2009. The mentioned test could control for unknown number and form of structural breaks using a selected frequency component of a Fourier function. Our results show almost poor countries stay poor and almost rich countries stay rich. South Korea, Hong Kong, Singapore, Taiwan, India, Malaysia, and China could escape lag deadlock and countries like Central African Republic, Congo, Cote d`Ivoire, the Gambia, Guinea, Haiti, Kenya, Rwanda, and Senegal diverged from the USA and moved into the poverty trap. <br /><br />