Feels Like Going Backwards: Assessing Income Convergence with a Long-Run Forecasting Approach

Relying on low frequency econometric methods, a new simple method to assess international income convergence is introduced. It implements the long-run forecasting definition and discards short and medium-term information contents of the data as these may produce misleading evidence. Robustness to non-stationarities is achieved using first differences of logged per capita incomes. Application to a selected sample of 67 different countries, including only one low-income country, provides scant support to the hypothesis. Even for a 120-year horizon, almost 4/5 or 80% of the population of the (positively biased selected) sample is forecast to still live in countries significantly lagging behind the leader