An Empirical Investigation on the Gravitation and Convergence of Industry return Rates in OECD Countries
AbstractTests are offered for the hypotheses that sectoral average profit rates and incremental return rates are gravitating around or converging towards a common value. We study data for various OECD countries relying on an econometric method able to account for residual autocorrelation and cross-sector correlation. Our null hypotheses receive only a mixed empirical support. This is interpreted as the result of various kinds of limitations to capital mobility. Policy implications are discussed.
Keywordscapital mobility, gravitation of profit rates, convergence, SURE estimation, exactly median unbiased estimator, industrial average profit rates, incremental return rates
JEL classificationL16, L19, L60, L70, L80, L90, B51, B52