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On the Role of Portfolio Indicators of the Capital Flows in the Convergence Processes – An Application of Systems of Regression Equations in the Case of Selected CEE Countries

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  • Piotr Adamczyk

    (Cracow University of Economics)

  • Mateusz Pipień

    (Cracow University of Economics)

Abstract

We analysed the empirical importance of the capital flows in processes of economic convergence of the CEE region. We depart from reference net measures of capital flow reflecting the level of development of the financial system and focus on gross capital flow. Our econometric model is based on Seemingly Unrelated Regression Equation (SURE) elaborated by Arnold Zellner. This environment seems an alternative to standard panel regression, because it enables cross-country heterogeneity of parameters of interest (like pace of convergence). We tested several restrictions of the unconstrained SURE model, leading to simpler specifications that would allow for regional homogeneity of the role of a particular factor (like capital flows) in growth fluctuations and β-type convergence.

Suggested Citation

  • Piotr Adamczyk & Mateusz Pipień, 2022. "On the Role of Portfolio Indicators of the Capital Flows in the Convergence Processes – An Application of Systems of Regression Equations in the Case of Selected CEE Countries," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 14(3), pages 303-333, September.
    • Handle: RePEc:psc:journl:v:14:y:2022:i:3:p:303-333
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    More about this item

    Keywords

    convergence; labour productivity; economic growth; SURE; capital flows;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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