A Pair-Wise Approach to Per Capita Output Convergence between European Regions

30 Pages Posted: 19 Feb 2009 Last revised: 11 Jun 2015

Date Written: February 19, 2009

Abstract

We apply Peseran (2007) pairwise approach of convergence to 195 European regions for the period 1980-2002. An index of convergence shows a decline in the average per capita output gap over the period, mainly by convergence between regions of different countries. Next, we estimate the share of stationary per capita output differentials among all possible pairs of regions. This share is expected to be high as possible in case of convergence. Several unit root tests give no evidence of convergence because most differentials contain a stochastic or a deterministic trend. Bootstrap simulations show that the accuracy of the results from unit root tests is satisfying. A stationary test gives results more favorable to convergence. Convergence is however restricted to a limited set of European regions. Finally, we test for structural breaks but don't find stronger evidence of convergence.

Keywords: Growth, Regional Convergence, Pairwise approach, Unit root, Structural breaks

JEL Classification: O47, C32

Suggested Citation

Le Pen, Yannick, A Pair-Wise Approach to Per Capita Output Convergence between European Regions (February 19, 2009). Available at SSRN: https://ssrn.com/abstract=1346353 or http://dx.doi.org/10.2139/ssrn.1346353

Yannick Le Pen (Contact Author)

Université Paris Dauphine ( email )

Place du Maréchal de Lattre de Tassigny
75775
France

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