Are shocks to national income persistent? New global evidence

Purpose – This paper aims to investigate the integrational properties of real GDP for 125 countries. Design/methodology/approach – The paper applies the Kwiatkowski et al. univariate test and a KPSS-type univariate test that accounts for multiple structural breaks – a test procedure proposed by Carrion-i-Silvestre et al. The panel versions of the KPSS-type test, proposed by Carrion-i-Silvestre et al. with and without structural breaks, are also applied. Findings – The paper finds that, while univariate tests with and without structural breaks provide mixed results on persistence, the panel test suggests that shocks to national output are persistent. Originality/value – This is a multi-country study that focuses on both developed and developing countries and uses more recent data to provide new and comparable evidence on the persistence of output.