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Regional convergence in the European Union (1985-1999). A spatial dynamic panel analysis.

Badinger, Harald and Müller, Werner and Tondl, Gabriele (2002) Regional convergence in the European Union (1985-1999). A spatial dynamic panel analysis. EI Working Papers / Europainstitut, 47. Forschungsinstitut für Europafragen, WU Vienna University of Economics and Business, Vienna.

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Abstract

We estimate the speed of income convergence for a sample of 196 European NUTS 2 regions over the period 1985-1999. So far there is no direct estimator available for dynamic panels with strong spatial dependencies. We propose a two-step procedure, which involves first spatial filtering of the variables to remove the spatial correlation, and application of standard GMM estimators for dynamic panels in a second step. Our results show that ignorance of the spatial correlation leads to potentially misleading results. Applying a system GMM estimator on the filtered variables, we obtain a speed of convergence of 6.9 per cent and a capital elasticity of 0.43.

Item Type: Paper
Keywords: growth / convergence / spatial dependence / spatial filtering / dynamic panels / GMM
Classification Codes: JEL C23, O00, R11
Divisions: Forschungsinstitute > Europafragen
Depositing User: Repository Administrator
Date Deposited: 14 Jan 2003 12:53
Last Modified: 15 Sep 2017 11:55
URI: http://epub.wu.ac.at/id/eprint/1786

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