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Conditional Beta- and Sigma-Convergence in Space: A Maximum Likelihood Approach

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  • Michael Pfaffermayr

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Abstract

Empirical work on regional growth under spatial spillovers uses two workhorse models: the spatial Solow model and Verdoorn's model. This paper contrasts these two views on regional growth processes and demonstrates that in a spatial setting the speed of convergence is heterogenous in both considered models, depending on the remoteness and the income gap of all regions. Furthermore, the paper introduces Wald tests for conditional spatial sigma-convergence based on a spatial maximum likelihood approach. Empirical estimates for 212 European regions covering the period 1980-2002 reveal a slow speed of convergence of about 0.7 percent per year under both models. However, pronounced heterogeneity in the convergence speed is evident. The Wald tests indicate significant conditional spatial sigma-convergence of about 2 percent per year under the spatial Solow model. Verdoorn's specification points to a smaller and insignificant variance reduction during the considered period.

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Bibliographic Info

Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2007-17.

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Length: 54
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:inn:wpaper:2007-17

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Keywords: Conditional spatial Beta- and Sigma-convergence; Spatial Solow model; Verdoorn's model; Spatial maximum likelihood estimates; European regions;

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Cited by:
  1. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2013. "Growth effects of regional policy in Germany: results from a spatially augmented multiplicative interaction model," The Annals of Regional Science, Springer, vol. 50(2), pages 535-554, April.
  2. Novotný, JOSEF, 2011. "Convergence and divergence in living standards among regions of the enlarged European Union (1992-2006)," MPRA Paper 34145, University Library of Munich, Germany.
  3. Rodríguez-Pose, Andrés & Tselios, Vassilis & Winkler, Deborah & Farole, Thomas, 2013. "Geography and the Determinants of Firm Exports in Indonesia," World Development, Elsevier, vol. 44(C), pages 225-240.
  4. Azomahou, Théophile T. & El ouardighi, Jalal & Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2011. "Testing convergence of European regions: A semiparametric approach," Economic Modelling, Elsevier, vol. 28(3), pages 1202-1210, May.
  5. Oberhofer, Harald & Pfaffermayr, Michael, 2010. "Firm Growth in Multinational Corporate Groups," Working Papers in Economics and Finance 2010-7, University of Salzburg.
  6. Vassilis Tselios, 2009. "Growth and Convergence in Income Per Capita and Income Inequality in the Regions of the EU," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(3), pages 343-370.
  7. Daniela Bunea, 2012. "Is Internal Migration Relevant to Regional Convergence? Comparative Analysis Across Five European Countries," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 6(2), pages 53-72, DECEMBER.
  8. Hashiguchi, Yoshihiro, 2009. "Bayesian Estimation of Spatial Externalities Using Regional Production Function: The Case of China and Japan," MPRA Paper 17902, University Library of Munich, Germany.
  9. Philipp Breidenbach & Timo Mitze & Christoph Schmidt, 2011. "Evaluating EU Regional Policy: Many Empirical Specifications, One (Unpleasant) Result," ERSA conference papers ersa11p1144, European Regional Science Association.
  10. R. Basile & S. Usai, 2012. "Analysis of regional endogenous growth," Working Paper CRENoS 201211, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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