(a) By limiting your sample to 24 OECD countries, you hope to have a more homogeneous set of countries in your sample, i.e., countries that are not too different with respect to their institutions. To simplify matters, you decide to only test for unconditional convergence. In that case, the laggards catch up even without taking into account differences in some of the driving variables. Your scatter plot and regression for the time period 1975-1989 are as follows:

g8975= 0.024 - 0.005PCGDP75_US;R2= 0.025,SER= 0.006 (0.06) (0.008)

where is the average annual growth rate of per capita GDP from 1975-1989, and PCGDP75_USis per capita GDP relative to the United States in 1975. Numbers in parenthesis are heteroskedasticity-robust standard errors.

Interpret the results. Is there indication of unconditional convergence? What critical value did you use?