DP1355 Twin Peaks: Growth and Convergence in Models of Distribution Dynamics

Author(s): Danny Quah
Publication Date: February 1996
Keyword(s): Catch-up, Convergence Club, Divergence, Intra-distribution Dynamics, Polarization, Stratification
JEL(s): C23, O40, O41, O57
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1355

Convergence concerns poor economies catching up with rich ones. At issue is what happens to the cross-sectional distribution of economies, not whether a single economy tends towards its own steady state. It is the latter, however, that has preoccupied the traditional approach to convergence analysis. This paper describes an alternative body of research that overcomes this shortcoming in the traditional approach. The new findings - on persistence and stratification; on the formation of convergence clubs; and on the distribution polarizing into twin peaks of rich and poor - suggest the relevance of a class of theoretical ideas different from those surrounding the production-function accounting traditionally favoured.