The endogeneity of the natural rate of growth in the regions of Italy
AbstractFollowing Leon-Ledesma and Thirlwall (2002a), this paper examines the hypothesis that the natural rate of growth of the Italian regions is endogenous to and positively affected by the actual growth rate. Relying on fixed-effects and SUR estimation techniques and using annual data for the 20 Italian regions over the period 1977-2003, we find strong support for the endogeneity hypothesis suggesting that faster actual growth raises the natural rate of growth of the average Italian region by about 3-3.7 percentage points. Furthermore, in line with recent findings in the literature, our analysis provides evidence of asymmetries in Okun's Law. In particular, the asymmetric Okun coefficient in the high-growth regime turns out to be positive in several cases, implying the unemployment rate may become pro-cyclical when actual growth rises above a certain threshold rate.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal International Review of Applied Economics.
Volume (Year): 24 (2010)
Issue (Month): 5 ()
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Other versions of this item:
- Matteo Lanzafame, 2006. "The Endogeneity of the Natural Rate of Growth in the Regions of Italy," Studies in Economics 0606, Department of Economics, University of Kent.
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
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