Economic Freedom and Welfare Before and After the Crisis by Petar Stankov

Author:Petar Stankov
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

It is also interesting to mention that, in addition to the convincing evidence of -convergence, we can observe graphical evidence of -convergence. This means cross-country differences in policies gradually disappear over time. The cross-country difference in policies is measured with the standard deviation (SD) of a given policy at a certain point in time. Then, the behavior of those standard deviations is monitored over time. If the SDs are growing smaller, there is evidence of -convergence. That evidence exists and is presented in Fig. 4.6.

To conclude, with occasional exceptions, no matter how you slice time, and no matter at which policy index you narrow your focus, policy convergence is there to be seen. It is powerful and is highly statistically significant. It is as if a gravity force is moving the world closer to an equilibrium policy model. However, no matter how similar countries become in terms of policies, it still remains to be seen if that policy convergence translates to welfare convergence. That is what the next section and the next chapter are about.

Fig. 4.7Income per capita convergence: 1970–2014.

Source Own calculations based on Economic Freedom of the World Data, http://​freetheworld.​com

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