Open Collections

Disaggregate dynamics and economic growth in Canada

University of British Columbia

This thesis takes the form of three essays in which I use disaggregate and aggregate information to examine Canadian economic growth. In the first essay, I present evidence that the process of economic growth differs for low income per capita provinces and industries. This contrasts with results from traditional studies of economic convergence. In those papers, estimates of a rate of convergence suggest that poor provinces eventually "catch up" to rich provinces by growing faster. Unfortunately, this approach ignores the pattern of economic growth within the cross-section distribution. Explicitly modelling the evolving distribution, I find little mobility in the cross-sectional ordering and some evidence of divergence. In the long run, the poor stay (relatively) poor and the rich remain (relatively) rich. In the second essay, I examine the dynamic effects of aggregate and disaggregate disturbances on both economic growth and the interaction between disaggregates. The approach is motivated by the class of models which predict two-way interaction between aggregate and disaggregate behaviour, such as Durlauf [28]. The disaggregate disturbance is identified as having no long-run impact on aggregate economic growth. I find that the aggregate shock has a large impact on aggregate income in both the short and long run; and accounts for most of its variation. The disaggregate shock contains some information for aggregate activity at business cycle horizons. Most interaction is explained by the disaggregate disturbance; the aggregate shock contributes little. In the third essay, I present results from a variety of unit root tests on provincial and manufacturing industry panel income data. Standard Dickey- Fuller unit root tests applied to panels require averaging of data across the cross-section. More powerful tests allow pooling of cross-section and time-series information. Using these methods, I find that the null hypothesis of a unit root is rejected—strongly contrasting with results obtained using the standard Dickey-Fuller methodology.

Thesis/Dissertation

application/pdf

2009-04-06

For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use.

http://hdl.handle.net/2429/6822

Economics

University of British Columbia

UBCV

DSpace