Skip to main content Accessibility help
Hostname: page-component-888d5979f-jgqf9 Total loading time: 0.27 Render date: 2021-10-26T03:34:52.275Z Has data issue: true Feature Flags: { "shouldUseShareProductTool": true, "shouldUseHypothesis": true, "isUnsiloEnabled": true, "metricsAbstractViews": false, "figures": true, "newCiteModal": false, "newCitedByModal": true, "newEcommerce": true, "newUsageEvents": true }


Published online by Cambridge University Press:  10 July 2018

Fuat C. Beylunioğlu
Istanbul Bilgi University
M. Ege Yazgan
Istanbul Bilgi University
Thanasis Stengos*
University of Guelph
Address correspondence to: Thanasis Stengos, Department of Economics and Finance, University of Guelph, Guelph, Ontario, N1G 2W1, Canada; e-mail:


The convergence hypothesis, which is developed in the context of growth economics, asserts that the income differences across countries are transitory, and developing countries will eventually attain the level of income of developed ones. On the other hand, convergence clubs hypothesis claim that the convergence can only be realized across groups of countries that share some common characteristics. In this study, we propose a new method to find convergence clubs that combines a pairwise method of testing convergence with maximum clique and maximal clique algorithms. Unlike many of those already developed in the literature, this new method aims to find convergence clubs endogenously without depending on a-priori classifications. In a Monte Carlo simulation study, the success of the method in finding convergence clubs is compared with a similar algorithm. Simulation results indicated that the proposed method perform better than the compared algorithm in most cases. In addition to the Monte Carlo, a new empirical evidence on the existence of convergence clubs is presented in the context of real data applications.

© Cambridge University Press 2018

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)


This work has been produced as a part of the research project (project no: 113K757) supported by The Scientific and Technological Research Council of Turkey (TUBİTAK). Ege Yazgan and Thanasis Stengos would like to acknowledge financial support from TUBİTAK, while Stengos would also like to thank SSHRC of Canada.


Abbott, A. and De Vita, G. (2013) Testing for long-run convergence across regional house prices in the UK: A pairwise approach. Applied Economics 45 (10), 12271238.CrossRefGoogle Scholar
Abbott, A., De Vita, G., and Altinay, L. (2012) Revisiting the convergence hypothesis for tourism markets: Evidence from turkey using the pairwise approach. Tourism Management 33 (3), 537544.CrossRefGoogle Scholar
Apergis, N. and Padhi, P. (2013) Health expenses and economic growth: Convergence dynamics across the Indian States. International Journal of Health Care Finance and Economics 13 (3–4), 261277.CrossRefGoogle ScholarPubMed
Azariadis, C. (1996) The economics of poverty traps part one: Complete markets. Journal of Economic Growth 1 (4), 449486.CrossRefGoogle Scholar
Azariadis, C. and Drazen, A. (1990) Threshold externalities in economic development. The Quarterly Journal of Economics 105 (2), 501526.Google Scholar
Baumol, W. J. (1986) Productivity growth, convergence, and welfare: What the long-run data show. The American Economic Review, 76, 10721085.Google Scholar
Bernard, A. and Durlauf, S. (1996) Interpreting tests of the convergence hypothesis. Journal of Econometrics 71, 161173.CrossRefGoogle Scholar
Bernard, A. B. and Durlauf, S. N. (1995) Convergence in international output. Journal of Applied Econometrics 10 (2), 97108.CrossRefGoogle Scholar
Beylunioğlu, F. C., Stengos, T., and Yazgan, E. (2018) Regime switching with structural breaks in output convergence. Studies in Nonlinear Dynamics and Econometrics, doi: Scholar
Bron, C. and Kerbosch, J. (1973) Algorithm 457: Finding all cliques of an undirected graph. Communications of the ACM 16 (9), 575577.CrossRefGoogle Scholar
Chatterji, M. (1992) Convergence clubs and endogenous growth. Oxford Review of Economic Policy 8 (4), 5769.CrossRefGoogle Scholar
Chortareas, G. and Kapetanios, G. (2009) Getting ppp right: Identifying mean-reverting real exchange rates in panels. Journal of Banking & Finance 33 (2), 390404.CrossRefGoogle Scholar
Corrado, L. and Weeks, M. (2011) Tests for Convergence Clubs. Cambridge Working Papers in Economics, CWPE, 1110.Google Scholar
Corrado, L., Martin, R., and Weeks, M. (2005) Identifying and interpreting regional convergence clusters across europe. The Economic Journal 115 (502), C133C160.CrossRefGoogle Scholar
Dufrénot, G., Mignon, V., and Naccache, T. (2012) Testing catching-up between the developing countries: “growth resistance” and sometimes “growth tragedy”. Bulletin of Economic Research 64 (4), 470508.CrossRefGoogle Scholar
Durlauf, S. N. and Johnson, P. A. (1995) Multiple regimes and cross-country growth behaviour. Journal of Applied Econometrics 10 (4), 365384.CrossRefGoogle Scholar
Durlauf, S. N., Johnson, P. A., and Temple, J. R. (2005) Growth econometrics. Handbook of Economic Growth 1, 555677.CrossRefGoogle Scholar
Fritsche, U. and Kuzin, V. (2011) Analysing convergence in europe using the non-linear single factor model. Empirical Economics 41 (2), 343369.CrossRefGoogle Scholar
Galor, O. (1996) Convergence? Inferences from theoretical models. The Economic Journal, 106, 10561069.CrossRefGoogle Scholar
Galor, O. (2011) Unified Growth Theory. Princeton, NJ: Princeton University Press.Google Scholar
Galor, O. and Moav, O. (2002) Natural selection and the origin of economic growth. The Quarterly Journal of Economics 117 (4), 11331191.CrossRefGoogle Scholar
Galor, O. and Weil, D. N. (2000) Population, technology, and growth: From malthusian stagnation to the demographic transition and beyond. American Economic Review 90 (4), 806828.CrossRefGoogle Scholar
Hausmann, R., Pritchett, L., and Rodrik, D. (2005) Growth accelerations. Journal of Economic Growth 10 (4), 303329.CrossRefGoogle Scholar
Hobijn, B. and Franses, P. H. (2000) Asymptotically perfect and relative convergence of productivity. Journal of Applied Econometrics 15 (1), 5981.3.0.CO;2-1>CrossRefGoogle Scholar
Ikeno, H. (2014) Pairwise tests of convergence of japanese local price levels. International Review of Economics & Finance 31, 232248.CrossRefGoogle Scholar
Johnson, P. and Papageorgiou, C. (2017) What remains of cross-country convergence? Journal of Economic Literature (commissioned).Google Scholar
Kapetanios, G. (2003) Determining the Stationarity Properties of Individual Series in Panel Datasets. U of London Queen Mary Economics working paper 495.CrossRefGoogle Scholar
Ketteni, E., Mamuneas, T., and Stengos, T. (2011) The effect of information technology and human capital on economic growth. Macroeconomic Dynamics 15 (5), 595615.CrossRefGoogle Scholar
Kim, Y. S. and Rous, J. J. (2012) House price convergence: Evidence from us state and metropolitan area panels. Journal of Housing Economics 21 (2), 169186.CrossRefGoogle Scholar
Konc, J. and Janezic, D. (2007) An improved branch and bound algorithm for the maximum clique problem. Proteins 4, 5.Google Scholar
Özkan, H., Stengos, T., and Yazgan, M. E. (2018) Persistence in convergence and club formation. Bulletin of Economic Research, Scholar
Pesaran, H. M. (2007) A pair-wise approach to testing for output and growth convergence. Journal of Econometrics 138 (1), 312355.Google Scholar
Pesaran, M. and Timmermann, A. (1992) A simple nonparametric test of predictive performance. Journal of Business and Economic Statistics 10, 461465.Google Scholar
Phillips, P. C. and Sul, D. (2007) Transition modeling and econometric convergence tests. Econometrica 75 (6), 17711855.CrossRefGoogle Scholar
Quah, D. T. (1996) Empirics for economic growth and convergence. European Economic Review 40 (6), 13531375.CrossRefGoogle Scholar
Stengos, T. and Yazgan, M. E. (2014) Persistence in convergence. Macroeconomic Dynamics 18 (4), 753782.CrossRefGoogle Scholar
Yilmazkuday, H. (2013) Inflation targeting, flexible exchange rates and inflation convergence. Applied Economics 45 (5), 593603.CrossRefGoogle Scholar
Cited by

Send article to Kindle

To send this article to your Kindle, first ensure is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

Note you can select to send to either the or variations. ‘’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats

Send article to Dropbox

To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

Available formats

Send article to Google Drive

To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

Available formats

Reply to: Submit a response

Please enter your response.

Your details

Please enter a valid email address.

Conflicting interests

Do you have any conflicting interests? *