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Testing for Convergence Clubs in Income per-capita: A Predictive Density Approach

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  • Canova, Fabio

Abstract

The paper proposes a technique to test jointly for groupings of unknown size in the cross-sectional dimension of a panel and estimates the parameters of each group, applying it to identifying convergence clubs in income per-capita. The approach uses the predictive density of the data, conditional on the parameters of the model. The steady state distribution of European regional data clusters around four poles of attraction with different economic features. The distribution of income per-cpaita of OECD countries has two poles of attraction and each group has clearly identifiable economic characteristics.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2201.

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Date of creation: Aug 1999
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Handle: RePEc:cpr:ceprdp:2201

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Keywords: Heterogeneities; Income Inequality; Panel Data; Predictive Density;

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References

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  1. Paapaa, Richard & van Dijk, Herman K., 1998. "Distribution and mobility of wealth of nations," European Economic Review, Elsevier, vol. 42(7), pages 1269-1293, July.
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  15. repec:cup:etheor:v:10:y:1994:i:3-4:p:774-808 is not listed on IDEAS
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  18. Fabio Canova & Albert Marcet, 1995. "The poor stay poor: Non-convergence across countries and regions," Economics Working Papers 137, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
  19. Phillips, Peter C.B. & Ploberger, Werner, 1994. "Posterior Odds Testing for a Unit Root with Data-Based Model Selection," Econometric Theory, Cambridge University Press, vol. 10(3-4), pages 774-808, August.
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