Question 1 Read the article "Are poor countries catching up with rich countries?" by Tyler Smith and the related paper by Paul Johnson and Chris Papageorgiou, and answer the following questions. What is the convergence hypothesis? What is the difference between conditional convergence and absolute convergence? Using a Solow growth model, can you explain the economic mech- anisms behind the convergence hypothesis? According to the article, does the real-world data show conditional or absolute convergence? What are the policy implications in light of the convergence pattern in the data?

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The convergence hypothesis suggests that over time less developed or poor countries tend to catch up with more developed or richer countries in terms ... View the full answer