On the use of panel stationarity tests in convergence analysis: empirical evidence for the EU countries
DOI:
https://doi.org/10.12775/EQUIL.2016.004Keywords:
economic growth, convergence, catching up, stationarity, ADF testAbstract
The study examines the concept of stochastic convergence in the EU28 countries over the 1994?2013 period. The convergence of individual countries? GDP per capita towards the EU28 average per capita income level and the pair-wise convergence between the GDP of individual countries are both analyzed. Additionally, we introduce our own concept of conditional stochastic convergence which is based on adjusted GDP per capita series in order to account for the impact of other growth factors on GDP. The analysis is based on time series techniques. To assess stationarity, ADF tests are used. The study shows that the process of stochastic convergence in the EU countries is not as widespread as the cross-sectional studies on b or s convergence indicate. Even if we extend the analysis to examine conditional stochastic convergence, the number of converging economies or pairs of countries rises, but not as much as it could be expected from the cross-sectional studies.
Downloads
References
Barro, R.J., & Sala-i-Martin, X. (1990). Economic Growth and Convergence Across the United States. National Bureau of Economic Research Working Paper, 3419.
Barro, R.J., & Sala-i-Martin, X. (2003). Economic Growth. Cambridge ? London: The MIT Press.
Bernard, A. B., & Durlauf, S. N. (1995). Convergence in International Output. Journal of Applied Econometrics, 10(2). http://dx.doi.org/10.1002/ jae.3950100202.
Bernard, A. B., & Durlauf, S. N. (1996). Interpreting Tests of the Convergence Hypothesis. Journal of Econometrics, 71(1-2). http://dx.doi.org/10.1016/0304-4076(94)01699-2.
Blundell, R., & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87(1). http://dx.doi.org/10.1016/S0304-4076(98)00009-8.
Christopoulos, D. K., & León-Ledesma, M. A. (2008). Time-series Output Convergence Tests and Stationary Covariates. Economics Letters, 101(3). http://dx.doi.org/10.1016/j.econlet.2008.09.009.
Cunado, J. (2011). Structural Breaks and Real Convergence in OPEC Countries. Journal of Applied Economics, 14(1). http://dx.doi.org/10.1016/S1514-0326(11)60007-X.
Cu?ado, J., & Pérez de Gracia, F. (2006). Real Convergence in Africa in the Second-half of the 20th Century. Journal of Economics and Business, 58(2). http://dx.doi.org/10.1016/j.jeconbus.2005.07.002.
Evans, P., & Kim, J. U. (2011). Stochastic Convergence of the Catch-up Rate and Multiple Structural Breaks in Asian Countries. Economics Letters, 111(3). http://dx.doi.org/10.1016/j.econlet.2011.02.012.
Kane, R. (2001). Investigating Convergence of the U.S. Regions: A Time-Series Analysis. U.S. Department of Commerce, Bureau of Economic Analysis Working Paper, 2001-02.
Lau, C. K. M. (2010). New Evidence about Regional Income Divergence in China. China Economic Review, 21(2). http://dx.doi.org/10.1016/j.chieco.2010.01.003.
Le Pen, Y. (2011). A Pair-wise Approach to Output Convergence between European Regions. Economic Modelling, 28(3). http://dx.doi.org/10.1016/j.eco nmod.2010.11.006.
Mankiw, N.G., Romer D. & Weil, D.N. (1992). A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics, 107(2). http://dx.doi.org/10.2307/2118477.
Matkowski, Z., Próchniak M. & Rapacki, R. (2013). Nowe i stare kraje Unii Europejskiej: konwergencja czy dywergencja? Prace i Materiały Instytutu Rozwoju Gospodarczego SGH, 91.
Pesaran, M. H. (2007). A Pair-wise Approach to Testing for Output and Growth Convergence. Journal of Econometrics, 138(1). http://dx.doi.org/10.1016 /j.jeconom.2006.05.024.
Próchniak, M., & Witkowski, B. (2013). Time Stability of the Beta Convergence among EU Countries: Bayesian Model Averaging Perspective. Economic Modelling, 30. http://dx.doi.org/10.1016/j.econmod.2012.08.031.
Próchniak, M., & Witkowski, B. (2014). On the Stability of the Catching-Up Process Among Old and New EU Member States. Implications from Bayesian Model Averaging. Eastern European Economics, 52(2). http://dx.doi.org/10.2753/EEE0012-8775520201.