Dynamic Spatial Modelling of Regional Convergence Process

27 Pages Posted: 16 Feb 2004

See all articles by Reinhold Kosfeld

Reinhold Kosfeld

University of Kassel - Economics

Jorgen Lauridsen

Centre of Health Economics Research, Department of Business and Economics; University of Southern Denmark - Department of Business and Economics

Date Written: 2004

Abstract

Econometric analysis of convergence processes across countries or regions usually refers to a transition period between an arbitrary chosen starting year and a fictitious steady state. Panel unit root tests and panel cointegration techniques have proved to belong to powerful econometric tools if the conditions are met. When referring to economically defined regions, though, it is rather an exception than the rule that coherent time series are available. For this case we introduce a dynamic spatial modelling approach which is suitable to trace regional adjustment processes in space instead of time. It is shown how the spatial error-correction mechanism (SEC model) can be estimated depending on the spatial stationarity properties of the variables under investigation. The dynamic spatial modelling approach presented in this paper is applied to the issue of conditional income and productivity convergence across labour market regions in unified Germany.

Keywords: Regional convergence, dynamic spatial models, spatial unit roots, spatial

JEL Classification: C21, R11, R15

Suggested Citation

Kosfeld, Reinhold and Lauridsen, Jorgen and Lauridsen, Jorgen, Dynamic Spatial Modelling of Regional Convergence Process (2004). Available at SSRN: https://ssrn.com/abstract=502404 or http://dx.doi.org/10.2139/ssrn.502404

Reinhold Kosfeld (Contact Author)

University of Kassel - Economics ( email )

Nora-Platiel Str. 4
34109 Kassel
Germany

Jorgen Lauridsen

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

Centre of Health Economics Research, Department of Business and Economics ( email )

Faculty of Social Sciences
Campusvej 55
DK-5230 Odense M
Denmark

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