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Real Convergence in Europe: A Cluster Analysis

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  • Juan Carlos Cuestas

    ()
    (Department of Economics, The University of Sheffield)

  • Mercedes Monfort

    (Jaume I University, Spain)

  • Javier Ordóñez

    (University of Bath)

Abstract

In this paper we analyse real convergence in GDP per worker in the EU member states. The aim is to test whether there is evidence of club convergence in the EU, i.e. divergence in GDP per worker. Evidence in favour of cluster or club convergence may be an indication of significant productivity divergences between countries, which may also explain the current turmoil in the euro zone. The results show evidence of different economic growth rates within Europe, which also converge to different steady states, implying divergence in the EU-14. Within the EU-14 member states we observe two convergence clubs, which are not related to the fact that some countries belong to the euro area. Furthermore, Eastern European countries are also divided in two clubs, with a more direct effect of belonging to the euro zone in the composition of the clubs.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2012_023.html
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Bibliographic Info

Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2012023.

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Length: 24 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:shf:wpaper:2012023

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Keywords: cluster; real convergence; economic integration; euro;

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  1. Salinas-Jimenez, M Mar & Alvarez-Ayuso, Inmaculada & Delgado-Rodriguez, M Jesus, 2006. "Capital accumulation and TFP growth in the EU: A production frontier approach," Journal of Policy Modeling, Elsevier, vol. 28(2), pages 195-205, February.
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  14. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
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  16. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
  17. Juan Carlos Cuestas & Luis A. Gil-Alana & Karl Taylor, 2012. "Inflation convergence in Central and Eastern Europe with a view to adopting the euro," Working Papers 12-01, Asociación Española de Economía y Finanzas Internacionales.
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Cited by:
  1. Mihaela Simionescu, 2014. "Testing the Convergence Hypothesis in the European Union," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences & Institute for World Economy of the Romanian Academy, vol. 2(1), pages 222-229, May.

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