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Testing for convergence clubs in income per-capita: A predictive density approach

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Abstract

The paper proposes a technique to jointly test for groupings of unknown size in the cross sectional dimension of a panel and estimates the parameters of each group, and applies 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-capita 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 Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 404.

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Date of creation: Jul 1997
Date of revision: Jun 1999
Handle: RePEc:upf:upfgen:404

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Web page: http://www.econ.upf.edu/

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Keywords: Heterogeneities; panel data; predictive density; income inequality;

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