A panel data estimation finds a high speed of income convergence among the U.S. states. However, initial incomes show a pattern which is difficult to explain by the estimated model. A simulation study shows that this pattern can be explained much more naturally when we assume that true...

The authors measure the time-series property of catastrophic medical costs facing the elderly using information on medical deductions from a panel of tax returns. During the period of analysis, 1968-73, taxpayers could deduct medical expenses above 3 percent of income. They correct for the...