What exactly is the “convergence rate”? Converging from what to what? c.f. CFAI Volume 3, Page 197, Paragraph 2
convergence rate similar to a (catch-up effect) is the hypothesis that poorer economies’ per capita incomes will tend to grow at faster rates than richer economies. As a result, all economies should eventually converge in terms of per capita income.
Thanks level3aspirant. Although instead of “per capital income” converging, I think it should be “GDP per capital” coverging, right?
i believe if gdp growth and gdp levels are high, productivity and income will be higher and will culminate into a higher per capita income.
But that’s not what the CFAI text says (or does it?)
i dont have the book ready with me. maybe it doesnt state it explicitly (cant recall exatly what’s mentioned there) but is it not reasonable implied from above? Also the above derived conclusions … are not something that’s contradictory in nature. maybe it can be treated as a further extension of the sS.