Detecting the Iran's Income per Capita Convergence Using Unit Root Tests with Endogenous Structural Breaks

Economic growth and promoting the nation’s welfare is one of the main concerns of governments and policy makers. Also, the process of per capita income convergence indicates changes to countries welfare. In this paper, in order to realize the convergence process of Income per capita of Iran with income per capita of 129 countries we use the time series model and ADF unit root test with multiple structural breaks. The results of this study show that, first; in Iran the most important shocks occurred in the years 1966, 1973, 1977-1978, 1985 and 1997. Secondly, due to various shocks, Iran could not reach to specific steady state in per capita income. Thirdly, Iran could not escape vicious circles and converge to high level per capita income during 1950-2006. Although, due to the first oil shock, the level of per capita income increased, but the negative shocks in the later decades leads to not only a decrease in per capita income but also a divergence between Iran per capita incomes with high per capita income countries.