The evolution of economic convergence in the European Union
AbstractThis paper investigates economic convergence in real income per capita between 27 European Union countries. We employ a non-linear latent factor framework to study transitional behavior among economies between 1970 and 2010. Our results offer important insights on the economic catch-up exhibited by the new EU members in light of the institutional changes and macroeconomic adjustment processes undertaken over the last 40 years. Our main findings suggest no overall real income per capita convergence in the EU, however, we identify subgroups that converge to different steady states using an iterative testing procedure. Regional linkages play a significant role in determining the formation of convergence clubs. The empirical evidence suggests a clear separation between the new and old EU member states in the long run. --
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Bibliographic InfoPaper provided by Deutsche Bundesbank, Research Centre in its series Discussion Papers with number 28/2013.
Date of creation: 2013
Date of revision:
Club convergence; Dynamic factor model; Economic integration; Growth; New member states;
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-06 (All new papers)
- NEP-EEC-2013-09-06 (European Economics)
- NEP-EUR-2013-09-06 (Microeconomic European Issues)
- NEP-FDG-2013-09-06 (Financial Development & Growth)
- NEP-GEO-2013-09-06 (Economic Geography)
- NEP-PBE-2013-09-06 (Public Economics)
- NEP-TRA-2013-09-06 (Transition Economics)
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