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Measurement of diminishing or divergent cross section dispersion in a panel plays an important role in the assessment of convergence or divergence over time in key economic indicators. Econometric methods, known as weak σ-convergence tests, have recently been developed (Kong, Phillips, & Sul, 2019) to evaluate such trends in dispersion in panel data using simple linear trend regressions. To achieve generality in applications, these tests rely on heteroskedastic and autocorrelation consistent (HAC) variance estimates. The present chapter examines the behavior of these convergence tests when heteroskedastic and autocorrelation robust (HAR) variance estimates using fixed-b methods are employed instead of HAC estimates. Asymptotic theory for both HAC and HAR convergence tests is derived and numerical simulations are used to assess performance in null (no convergence) and alternative (convergence) cases. While the use of HAR statistics tends to reduce size distortion, as has been found in earlier analytic and numerical research, use of HAR estimates in nonparametric standardization leads to significant power differences asymptotically, which are reflected in finite sample performance in numerical exercises. The explanation is that weak σ-convergence tests rely on intentionally misspecified linear trend regression formulations of unknown trend decay functions that model convergence behavior rather than regressions with correctly specified trend decay functions. Some new results on the use of HAR inference with trending regressors are derived and an empirical application to assess diminishing variation in US State unemployment rates is included.

This survey of the literature on the convergence of carbon dioxide (CO₂) emissions informs researchers on areas for future research by summarizing the countries examined, the types of convergence tested and the methodological approaches undertaken.

This survey examines peer-reviewed empirical studies of CO₂ emissions convergence with respect to country coverage and alternative approaches to test for various types of convergence.

For large multicountry studies, the support for convergence is quite limited. However, studies focused exclusively on a subset of countries defined by income classification, geographic region or institutional structure reveal the finding of convergence is more prevalent. Studies at the subnational level have primarily been in the cases of the US and China with the exception of two studies across industry sectors in Portugal and Sweden.

This study focuses exclusively on peer-reviewed published studies.

This study is relevant to the design of mitigation strategies to reduce CO₂ emissions and the assumption of convergence underlying climate change models.

As a major component of greenhouse gas emissions, CO₂ emissions is of global importance in its impact on the environment and climate change.

This study provides the most recent and comprehensive survey of the empirical literature on the convergence of CO₂ emissions.

In this study, we aim to test the stochastic convergence of per capita clean energy use in 30 OECD (Organization for Economic Co-operation and Development) countries for the period of 1965–2017.

This study employed both linear and nonlinear panel unit root tests, and unlike other studies, this study allowed fractional values in addition to integer values for frequencies in the Fourier functions. Integer values of frequency indicate temporary breaks, while fractional values show permanent breaks.

The results of the linear panel unit root test indicate that clean energy use does not converge to group average for almost all OECD countries. However, the results of nonlinear panel unit root tests provide evidence that the stochastic convergence hypothesis of clean energy consumption cannot be rejected for most countries. This study does not find any evidence for stochastic convergence of clean energy use in Australia, Canada, Denmark, Ireland, Norway or Sweden. Therefore, the policies regarding clean energy are mandatory in these countries due to their effectiveness. This study also reveals that there are permanent structural breaks in the convergence process of clean energy consumption in approximately half of OECD countries.

This study considers temporary and permanent smooth structural shifts in addition to nonlinearity when testing the stationarity of clean energy consumption in a country i relative to the group average. This new method eliminates deficiencies of the previous panel data techniques. Thus, it provides more reliable results compared to existing literature.

The paper tests for long‐run monetary policy convergence and short‐run policy interactions in seven ERM countries over the 1979‐1992 period using the approach of multivariate cointegration and Granger‐causality tests. The authors provide evidence for very little monetary policy convergence, even during the more stable 1987‐92 period. Tests for short‐run monetary policy interactions show that, in agreement with some other studies, Germany is not the leader country in the system as it appears to accommodate shocks in other member countries. The tests show also that full monetary policy convergence applied among Germany, Belgium and The Netherlands in the 1987‐92 period implies that these countries could be the first to join a European monetary union should a two‐speed approach to monetary union become a reality.

This paper investigates income convergence using different convergence concepts and methodologies for 72 countries over the period between 1960 and 2010.

This study applies beta (β), sigma (s), stochastic and club convergence approaches. For β-convergence analysis, it derives the cross-country growth regressions of the Solow growth model under the basic and augmented Cobb–Douglass (CD) production functions and estimates them using cross-section and panel data estimators. While it employs both the widely used coefficient of variation and recently developed weak s-convergence approaches for s-convergence, it applies three different unit root tests for stochastic convergence. To test club convergence, it estimates the log-t regression.

The results reveal that (1) there exists conditional β-convergence, meaning that poorer countries grow faster than richer countries; (2) income per worker is not (weakly) s-converging, and cross-sectional variation does not tend to fall over the years; (3) stochastic convergence is not found and (4) countries in the sample do not converge to the unique equilibrium, and there exist five distinctive convergence clubs.

The results clearly show that heavily relying on one of the convergence techniques might lead researchers to obtain misleading results regarding the existence of convergence. Therefore, to draw reliable inferences, the results should be checked using different convergence concepts and methodologies.

Contrary to the previous literature, which is generally restricted to testing the existence of absolute and conditional β-convergence between countries, to the best of the author’s knowledge, this is the first study to consider and compare all originally and recently developed fundamental concepts of convergence altogether. Besides, it uses the Penn World Table (PWT) 9.1 and extends the period to 2010. From this point of view, this study is believed to provide the most up-to-date empirical evidence.

The purpose of the study is to examine the long-run convergence properties of condominium prices based on the ripple effect for five major US metropolitan areas (Boston, Chicago, Los Angeles, New York and San Francisco). Specifically, we test for both overall convergence in condominium prices and the possibility of distinct convergence clubs to ascertain the interdependence of geographically dispersed metropolitan condominium markets.

Our analysis uses two approaches to identify the convergence properties of condominium prices: the Lee and Strazicich (2003) unit root test with endogenous structural breaks and the Phillips and Sul (2007, 2009) time-varying nonlinear club convergence tests.

The Lee and Strazicich (2003) unit root tests identify two structural breaks in 2006 and 2008 with the rejection of the null hypothesis of a unit root and long-run convergence in condominium prices in the cases of Boston and New York. The Phillips and Sul (2007, 2009) club convergence test reveals the absence of overall convergence in condominium prices across all metropolitan areas, but the emergence of two distinct convergence clubs with clear geographical segmentation: on the east coast with Boston and New York and the west coast with Los Angeles and San Francisco while Chicago exhibits a non-converging path.

The results highlight the distinct geographical segmentation of metropolitan condominium markets, which provides useful information to local policymakers, financial institutions, real estate developers and real estate portfolio managers. The limitations of the research are the identification of the underlying sources for the convergence clubs identified due to the availability of monthly data for a number of potential variables.

The absence of overall convergence in condominium prices, but the emergence of distinct convergence clubs that reflects the geographical segmentation of metropolitan condominium markets raises the potential for portfolio diversification.

Unlike previous studies that have focused on single-family housing, this is the first study to examine the convergence of metropolitan area condominium prices.

“It should also be noted that the objective of convergence and equal distribution, including across under-performing areas, can hinder efforts to generate growth. Contrariwise, the objective of competitiveness can exacerbate regional and social inequalities, by targeting efforts on zones of excellence where projects achieve greater returns (dynamic major cities, higher levels of general education, the most advanced projects, infrastructures with the heaviest traffic, and so on). If cohesion policy and the Lisbon Strategy come into conflict, it must be borne in mind that the former, for the moment, is founded on a rather more solid legal foundation than the latter” European Commission (2005, p. 9)Adaptation of Cohesion Policy to the Enlarged Europe and the Lisbon and Gothenburg Objectives.

The investment development path of emerging markets’ MNEs is significantly different from the developed (TRIAD) world’s MNEs; BRIC MNEs seem to have taken a different trajectory on account of various political and economic reasons, ranging from the ‘forms of entry’ to ‘country-specific advantages’ (Tulder, R. V. (2010). Toward a renewed stages theory for BRIC multinational enterprises? A home country bargaining approach. In K. P. Sauvant, G. McAllister, & W. A. Maschek (Eds.), Foreign direct investments from emerging markets: The challenges ahead (pp. 61–74). New York, NY: Palgrave Macmillan). Yet, some believe that in the long run the internationalization strategy of the developed world MNEs and BRIC MNEs will converge. Internationalization strategies as measured by OFDI depend on various macroeconomic determinants such as income, interest rate, openness of the economy, etc. The chapter intend to highlight, the significant difference between these two groups of countries on account of diverse political reforms towards internalization of firms, yet see if these different countries might converge.

Regression analysis examines the significance of the role of home government by testing the effect of governance indicators; that is voice and accountability, on OFDI. It further, tests for convergence of internationalization strategies of the two historically divergent groups, also, it tests convergence amongst the BRIC nations. Along with forecasting, time series analysis is also employed to examine convergence using univariate sigma convergence techniques.

Impact of voice and accountability is significant but it hinders OFDI for BRIC nations, while it promotes OFDI for TRIAD & ALL. Moreover, the analysis found the existence of convergence, that is BRIC will catch up with TRIAD, but though convergence exists amongst BRIC if we take a long span of time (45 years), it is absent in short span of time (19 years), as lately BRIC have shown divergent tendency.

Small sample size in multivariate regression analysis. Also, the governance indicator, that is voice and accountability, is perception based, and missing gaps in data for governance indicator is filled using interpolation.

Empirically testing the convergence of BRIC nations with the developed world. A univariate time series analysis is undertaken to understand each country’s heterogeneous FDI outflows and to address the research gap in existing forecasting literature. In addition, the comparison specifically between the Emerging Market Economies, that is the BRIC nations and the developed world gives some useful insights. This chapter ascertains the impact of governance indicator on OFDI; empirical literature shows such analysis for IFDI & FDI, but OFDI is rarely been dealt with.

This study aims to analyze the convergence of environmental degradation clubs in the Association of Southeast Asian Nations (ASEAN). In addition, this study also analyzes the influence of renewable energy and foreign direct investment (FDI) on each club as an intervention to change the convergence pattern in each club.

This study analyzes the club convergence of environmental degradation in an effort to find out the distribution of environmental degradation reduction policies. This study uses club convergence with the Phillips and Sul (PS) convergence methodology because it considers multiple steady-states and is robust. This study uses annual panel data from 1998 to 2020 and ASEAN country units with ecological footprints as proxies for environmental degradation. After obtaining the club results, the analysis continued by analyzing the impact of renewable energy and FDI on each club using panel data regression and the Stochastic Impacts by Regression on Population, Affluence and Technology model specification.

Based on club convergence, ASEAN countries can be grouped into three clubs with two divergent countries. Club 1 has an increasing pattern of environmental degradation, while Club 2 and Club 3 show no increase. Club 1 can primarily apply renewable energy to reduce environmental degradation, while Club 2 requires more FDI. The authors expect policymakers to take into account the clubs established to formulate collaborative policies among countries. The result that FDI reduces environmental degradation in this study is in line with the pollution halo hypothesis. This study also found that population has a significant effect on environmental degradation, so policies to regulate population need to be considered. On the other hand, increasing income has no effect on reducing environmental degradation. Therefore, the use of renewable energy and FDI toward green investment is expected to intensify within ASEAN countries to reduce environmental degradation.

This research is by far the first to apply PS Club convergence to environmental degradation in ASEAN. In addition, this study is also the first to analyze the influence of renewable energy and FDI on each club formed, considering the need for renewable energy use that has not been maximized in ASEAN.

The policy of globalization for India was a mix bag contributing benefits and losses. Increased foreign trade, foreign exchange reserves, market expansion was contrasted with fall in domestic industries, unemployment and increase in inequality. The present study analyzes the presence of convergence or divergence of incomes of the states in India using the concepts of Sigma convergence, Beta convergence, and stochastic convergence for the post-reform period of 1993–1994 to 2014–2015. The study tests for absolute β – convergence by using trend line analysis; regression of CAGR (Compound Annual Growth Rate) as a function of the Average PCSDP (Per Capita State Domestic Product) of initial three years of the observed period and regression of point-to-point growth rate of per capita income to the growth rate of initial three years. A negative relationship shall imply the presence of convergence. Further the study uses panel unit root test and relevant dynamic processes to test for conditional β and stochastic convergences. It reveals the evidence of divergence in income across the states.