Τesting convergence and divergence: the data from Greece
AbstractThe convergence hypothesis is a popular tenet in modern discussions in macroeconomics and regional economics. It derives from the very fundamental properties of the neoclassical single-sector growth model, and its assumption of diminishing returns to scale. Following this theoretical framework a number of empirical tests (σ or unconditional β or conditional β-convergence) has been developed. This paper tests unconditional and conditional β-convergence for the Greek economy. Three issues are being considered: (i)if there is regional convergence, (ii) if there is a North-Southern divide, (iii) if Greece is converging with the other economies taking part in the European integration project. Our empirical results reject the convergence hypothesis in all cases. These findings, together with similar findings for many other economies, pose significant problems for the theoretical assumptions of the neoclassical growth model with exogenous technical change.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17170.
Date of creation: 1998
Date of revision:
convergence; neoclassical theory; Greece;
Find related papers by JEL classification:
- R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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- Button, Kenneth J & Pentecost, Eric J, 1995. "Testing for Convergence of the EU Regional Economies," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 33(4), pages 664-71, October.
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