Macroeconomists Who Study the Determinants of Per Capita Income (The

Essay

Macroeconomists who study the determinants of per capita income (the "wealth of
nations")have been particularly interested in finding evidence on conditional
convergence in the countries of the world.Finding such a result would imply that all
countries would end up with the same per capita income once other variables such as
saving and population growth rates, education, government policies, etc., took on the
same value.Unconditional convergence, on the other hand, does not control for these
additional variables.
(a)The results of the regression for 104 countries was as follows, $$\begin{aligned}\widehat { g 6090 } = & 0.019 - 0.0006 \times \operatorname { RelProd } _ { 60 } , R ^ { 2 } = 0.00007 , S E R = 0.016 \\& ( 0.004 ) \quad ( 0.0073 ) ,\end{aligned}$$ where $g 6090$ is the average annual growth rate of GDP per worker for the 1960-1990 sample period, and RelProd $_ { 60 }$ is GDP per worker relative to the United States in 1960.

For the 24 OECD countries in the sample, the output is $$\begin{aligned}\widehat { g 6090 } = & 0.048 - 0.0404 \operatorname { RelProd } _ { 60 } , R ^ { 2 } = 0.82 , S E R = 0.0046 \\& ( 0.004 ) ( 0.0063 )\end{aligned}$$ Interpret the results and point out the difference with regard to unconditional
convergence.