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Are real GDP levels nonstationary across Central and Eastern European countries?

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Author Info

  • Pei-Long Shen

    ()
    (Shanxi University of Finance and Economics)

  • Chih-Wei Su

    ()
    (Shanxi University of Finance and Economics)

  • Hsu-Ling Chang

    ()
    (Ling Tung University)

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    Abstract

    This study applies the Sequential Panel Selection Method (SPSM) proposed by Chortareas and Kapetanios (2009) to investigate and assess the non-stationary properties of whether real GDP follows a trend stationary or a difference stationary process for Central Eastern European (CEE) countries. SPSM can classify the whole panel into a group of stationary series and a group of non-stationary series. We clearly identify how many and which series in the panel are stationary processes and provide robust evidence clearly indicating that per capita real GDP for CEE countries holds stationary for three countries. Our findings point out their per capita real GDP convergence is a mean reversion towards equilibrium values in a non-linear way. Our results have important policy implications for macroeconomic policy, modeling, testing and forecasting for these CEE countries under study.

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    Bibliographic Info

    Article provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.

    Volume (Year): 13 (2013)
    Issue (Month): 1 (July)
    Pages: 99-108

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    Handle: RePEc:bic:journl:v:13:y:2013:i:1:p:99-108

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    Related research

    Keywords: Per Capita Real GDP; Sequential Panel Selection Method; Fourier Function; Structural Change;

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    1. Cheung, Yin-Wong & Chinn, Menzie David, 1996. "Deterministic, Stochastic, and Segmented Trends in Aggregate Output: A Cross-Country Analysis," Oxford Economic Papers, Oxford University Press, vol. 48(1), pages 134-62, January.
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    10. Pei-Long Shen & Chih-Wei Su & Hsu-Ling Chang, 2013. "Are real GDP levels nonstationary across Central and Eastern European countries?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(1), pages 99-108, July.
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    Cited by:
    1. Pei-Long Shen & Chih-Wei Su & Hsu-Ling Chang, 2013. "Are real GDP levels nonstationary across Central and Eastern European countries?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(1), pages 99-108, July.

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