Regional Income Convergence in the Enlarged Europe, 1995-2000: A Spatial Econometric Perspective

28 Pages Posted: 3 Jul 2004 Last revised: 14 Aug 2008

See all articles by Manfred M. Fischer

Manfred M. Fischer

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics

Claudia Stirböck

Deutsche Bundesbank

Date Written: 2004

Abstract

This paper adopts a spatial econometric perspective to analyse regional convergence of per capita income in Europe in 1995 to 2000 and, moreover, relaxes the assumption of a single steady-state growth path which appears to be out of tune with reality of empirical dynamics. The two-club spatial error convergence model with groupwise heteroskedasticity is found to be most appropriate for the data at hand. Two empirical key findings are worthwhile to note. The first is that the data provide much support for unconditional beta-convergence in Europe. The second is that the usual convergence conclusions hold. But they do so for reasons that are not revealed by the classical test equation that is typical in mainstream economics literature.

Keywords: European Regions, Income Convergence, Spatial Econometrics

JEL Classification: C21, O52, R11, R15

Suggested Citation

Fischer, Manfred M. and Stirböck, Claudia, Regional Income Convergence in the Enlarged Europe, 1995-2000: A Spatial Econometric Perspective (2004). ZEW - Centre for European Economic Research Discussion Paper No. 04-042, Available at SSRN: https://ssrn.com/abstract=560882 or http://dx.doi.org/10.2139/ssrn.560882

Manfred M. Fischer (Contact Author)

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics ( email )

Welthandelsplatz 1, D4
Vienna, 1020
Austria

Claudia Stirböck

Deutsche Bundesbank ( email )

Economics Department
Wilhelm-Epstein-Str. 14
Frankfurt, D-60431
Germany

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