Old Wine in a New Bottle: Growth Convergence Dynamics in the EU
Atlantic Economic Journal, Vol. 38, No. 2, pp. 169-181
Posted: 5 Mar 2008 Last revised: 14 Mar 2011
Date Written: February 29, 2008
In this paper we explore convergence of real per capita output across the European Union (EU) countries as well as the transitional behaviour of possible underlying factors that are responsible for any convergence or divergence pattern. The new panel convergence methodology developed by Phillips and Sul (2007) is employed in a production function growth accounting approach and data from the Total Economy Database and the Total Economy Growth Accounting Database. The empirical findings suggest that the EU countries form two distinct convergent clubs exhibiting considerable heterogeneity in the underlying growth factors. These findings should help policy makers in designing appropriate growth-oriented programs as well as in setting priorities in their implementation.
Keywords: Growth convergence, growth factors, transition paths, EU countries, logt test
JEL Classification: O40, O47, C32, C33
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