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Multiple Regimes in Cross-Region Growth Regressions with Spatial Dependence: A Parametric and a Semi-parametric Approach

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  • Roberto Basile

    ()

  • Luca De Benedictis

    ()

  • Sergio de Nardis

    ()

  • Marianna Mantuano

    ()

Abstract

This paper studies the distribution dynamics of development across European regions over the period 1975-2000. Regional development is measured in terms of both per capita GDP (Y/P) and its components: labour productivity and employment ratio (that in turn can be decomposed in terms of activity and unemployment rate). The Core/Periphery pattern in the European Union is firstly investigated and a comparative analysis in terms of income, productivity, employment and unemployment rates of the two partitions is carried out. Moreover, for each variable as well as for each partition, a nonparametric beta convergence analysis is applied. Synthetically, the results confirm the lack of regional convergence in per capita incomes, the presence of a negative quasi-linear relationship between growth rates and initial levels of labour productivity and a U-shaped relationship between growth rates and initial levels of unemployment rates. As it is well known, however, b-convergence analysis does not allow any test of multiple equilibria, such as “emerging twin peaks”, in the growth process. Equilibrium multiplicity can be properly assessed by using nonparametric techniques of analysis of the cross-regional distribution. In particular, a way to quantify the intra-distribution dynamics is the multivariate kernel, which estimates the joint density of regional income, productivity and (un)employment distribution at time t0 and t0+t. The results of this analysis suggest that over the period considered the regional growth pattern in Europe has followed a polarisation process rather than a convergence path. This appears particularly true in the case of per capita incomes and unemployment rates. Finally, in order to “explain” polarisation, conditional multivariate kernels are estimated. In particular, the role of spatial contiguity and regional sectoral specialisation is investigated.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p4.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p4

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  1. Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
  2. Roberto Basile & Sergio De Nardis & Alessandro Girardi, 2003. "Dinamiche di sviluppo nel centro e nella periferia d'Europa: il ruolo delle politiche strutturali," Rivista di Politica Economica, SIPI Spa, vol. 93(4), pages 89-134, July-Augu.
  3. Liu, Zhenjuan & Stengos, Thanasis, 1999. "Non-linearities in Cross-Country Growth Regressions: A Semiparametric Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(5), pages 527-38, Sept.-Oct.
  4. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  5. Durlauf, Steven N. & Kourtellos, Andros & Minkin, Artur, 2001. "The local Solow growth model," European Economic Review, Elsevier, vol. 45(4-6), pages 928-940, May.
  6. Durlauf, S.N. & Johnson, P.A., 1994. "Multiple Regimes and Cross-Country Growth Behavior," Working papers 9419, Wisconsin Madison - Social Systems.
  7. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
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