Convergence in Pre-Capita GDP Across European Regions: A Reappraisal

32 Pages Posted: 11 Oct 2004

See all articles by Valentina Meliciani

Valentina Meliciani

LUISS Guido Carli University - LUISS Business school

Franco Peracchi

University of Rome Tor Vergata - Department of Economics and Finance; University of Rome Tor Vergata - Centre for International Studies on Economic Growth (CEIS); EIEF

Date Written: October 2004

Abstract

This paper studies convergence in per-capita GDP across European regions over the period 1980-2000. We use median unbiased estimators of the rate of convergence to the steady-state growth path, while allowing for unrestricted patterns of heterogeneity and spatial correlation across regions. By permitting the model parameters to be completely different across regions, not only we avoid imposing strong a priori assumptions but we are also able to analyze the spatial patterns in the estimated coefficients. Our results differ from those found using conventional estimators. The main differences are: i) the mean rate of convergence is much lower; ii) for most regions this rate is zero; iii) the number of regions for which we reject equality in trend growth rates is substantially lower. We also find significant evidence of correlation of growth rates across neighbor regions and across regions belonging to the same country.

Keywords: Regional convergence, median unbiased estimation, heterogeneous panel models

JEL Classification: R11, C40, C49

Suggested Citation

Meliciani, Valentina and Peracchi, Franco, Convergence in Pre-Capita GDP Across European Regions: A Reappraisal (October 2004). CEIS Working Paper No. 58. Available at SSRN: https://ssrn.com/abstract=601663 or http://dx.doi.org/10.2139/ssrn.601663

Valentina Meliciani (Contact Author)

LUISS Guido Carli University - LUISS Business school ( email )

Viale Pola 12
Rome, 00198
Italy

Franco Peracchi

University of Rome Tor Vergata - Department of Economics and Finance ( email )

Via di Tor Vergata
Rome, Lazio 00133
Italy

University of Rome Tor Vergata - Centre for International Studies on Economic Growth (CEIS) ( email )

Via Columbia, 2
Rome, I-00133
Italy

EIEF ( email )

via Sallustiana 62
Rome, 00187
Italy

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