Tests of the `Convergence Hypothesis': A Critical Note

I argue in this paper that the `speed of convergence' estimated in recent works on `convergence' does not capture `actual' convergence towards a steady state, but rather conditional dynamics towards a moving target. Although this conditional convergence can be taken to imply that there are decreasing returns to such storable assets as physical and human capital, they cannot be taken to rule out unbounded growth (since human capital could well be indefinitely growing). I offer a test of the `convergence hypothesis' based on the analysis of a two-dimensional system and find that it cannot be accepted.