On the gravitation and convergence of industry incremental rates of return in OECD countries

Abstract

The hypotheses of sectoral incremental rates of returns gravitating around or converging towards a common value are tested on data for various OECD countries relying on an econometric method able to account for residual autocorrelation and cross-sector correlation. Our null hypotheses receive only a mixed empirical support. This is interpreted as the result of limitations to capital mobility and of persistent differentials in the innovative performance of industries.capital mobility, gravitation, convergence, incremental rates of returns, SURE estimation, exactly median unbiased estimator