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A panel data test for poverty traps

A panel data test for poverty traps
A panel data test for poverty traps
This article develops a threshold panel data nonlinearity test for poverty traps. The new testing strategy extends the work on nonlinearity tests for panel data by considering threshold nonlinearities in the fixed-effects components. Monte Carlo simulations are conducted to evaluate the finite-sample performance of these tests. The tests are applied to the relationship between Gross Domestic Product (GDP) per capita and capital stock per capita. Our application to a panel of countries for the period 1973 to 2007 uncovers the presence of two regimes determined by the level of capital stock per capita. The conclusions from our test also support the existence of a poverty trap determined by a capital stock per capita level at the 11% quantile of its pooled worldwide distribution.
nonlinearity tests, panel data, poverty traps, threshold models
0003-6846
1943-1952
Galvao, A.
e0987498-19e4-4bed-b2d7-3d605ca1cbed
Montes-Rojas, G.
d139fc6a-1f73-4db6-bb54-a38d14a7b030
Olmo, Jose
706f68c8-f991-4959-8245-6657a591056e
Galvao, A.
e0987498-19e4-4bed-b2d7-3d605ca1cbed
Montes-Rojas, G.
d139fc6a-1f73-4db6-bb54-a38d14a7b030
Olmo, Jose
706f68c8-f991-4959-8245-6657a591056e

Galvao, A., Montes-Rojas, G. and Olmo, Jose (2013) A panel data test for poverty traps. Applied Economics, 45 (14), 1943-1952. (doi:10.1080/00036846.2011.641930).

Record type: Article

Abstract

This article develops a threshold panel data nonlinearity test for poverty traps. The new testing strategy extends the work on nonlinearity tests for panel data by considering threshold nonlinearities in the fixed-effects components. Monte Carlo simulations are conducted to evaluate the finite-sample performance of these tests. The tests are applied to the relationship between Gross Domestic Product (GDP) per capita and capital stock per capita. Our application to a panel of countries for the period 1973 to 2007 uncovers the presence of two regimes determined by the level of capital stock per capita. The conclusions from our test also support the existence of a poverty trap determined by a capital stock per capita level at the 11% quantile of its pooled worldwide distribution.

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More information

Published date: 2013
Keywords: nonlinearity tests, panel data, poverty traps, threshold models
Organisations: Economics

Identifiers

Local EPrints ID: 348628
URI: https://eprints.soton.ac.uk/id/eprint/348628
ISSN: 0003-6846
PURE UUID: 1320712e-4b08-4c20-a756-8ebe8efcd89e
ORCID for Jose Olmo: ORCID iD orcid.org/0000-0002-0437-7812

Catalogue record

Date deposited: 18 Feb 2013 09:29
Last modified: 27 Jul 2019 00:31

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