Econometric Society 57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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TWIN PEAKS: DISTRIBUTION DYNAMICS OF ECONOMIC GROWTH ACROSS INDIAN STATES


Category: Econometrics
PANEL DATA APPLICATIONS I
Sunday 25th August 2002, 09:30 - 11:00, Room: 5.4
Session Chair(s): Kjersti-Gro Lindquist, Central Bank of Norway, NORWAY

Presenter(s): Bandyopadhyay, Sanghamitra

Co-Author(s): none

Keyword(s): capital investment, conditional convergence, convergence clubs, distribution dynamics, India, infrastructure, macroeconomic stability, panel data

JEL(s): C23, E62, O53

Abstract:

This paper documents the convergence of incomes across Indian states over the period 1965 to 1998. It departs from traditional analyses of convergence by tracking the evolution of the entire income distribution, instead of standard regression and time series analyses – known as the distribution dynamics approach in the growth literature. The findings reveal twin-peaks dynamics – the existence of two income convergence clubs, one at 50 per cent, another at 12 per cent of the national average income. Income disparities seem to have declined over the sixties, only to increase over the following three decades. The observed polarisation is strongly explained by the disparate distribution of infrastructure and to an extent by a number of macroeconomic indicators; that of capital expenditure and fiscal deficits.


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Paper Reference Number: 1556

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25th August 2002 - 28th August 2002, Venice, Italy

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