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Detecting Convergence Clubs

Author

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  • Beylunioğlu, Fuat C.
  • Yazgan, M. Ege
  • Stengos, Thanasis

Abstract

The convergence hypothesis, which is developed in the context of growth economics, asserts that the income differences across countries are transitory, and developing countries will eventually attain the level of income of developed ones. On the other hand, convergence clubs hypothesis claim that the convergence can only be realized across groups of countries that share some common characteristics. In this study, we propose a new method to find convergence clubs that combines a pairwise method of testing convergence with maximum clique and maximal clique algorithms. Unlike many of those already developed in the literature, this new method aims to find convergence clubs endogenously without depending on a-priori classifications. In a Monte Carlo simulation study, the success of the method in finding convergence clubs is compared with a similar algorithm. Simulation results indicated that the proposed method perform better than the compared algorithm in most cases. In addition to the Monte Carlo, a new empirical evidence on the existence of convergence clubs is presented in the context of real data applications.

Suggested Citation

  • Beylunioğlu, Fuat C. & Yazgan, M. Ege & Stengos, Thanasis, 2020. "Detecting Convergence Clubs," Macroeconomic Dynamics, Cambridge University Press, vol. 24(3), pages 629-669, April.
    • Handle: RePEc:cup:macdyn:v:24:y:2020:i:3:p:629-669_5
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    Cited by:

    1. Alexandrov Nevski Sachs Semanou & Kamil Uslu, 2019. "Comparative Analysis of Growth Convergence in Selected West African Countries," Business and Economic Research, Macrothink Institute, vol. 9(3), pages 87-101, September.
    2. Ana-Maria HOLOBIUC, 2019. "Smart An Analysis Of The Real Convergence Within The European Union And Of The Well-Being Of The European Citizens," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(1), pages 607-614, November.
    3. Lekha Chakraborty & Pinaki Chakraborty, 2018. "Federalism, fiscal asymmetries and economic convergence: evidence from Indian States," Asia-Pacific Journal of Regional Science, Springer, vol. 2(1), pages 83-113, April.
    4. Boikos, Spyridon & Panagiotidis, Theodore & Voucharas, Georgios, 2022. "Financial development, reforms and growth," Economic Modelling, Elsevier, vol. 108(C).
    5. Vicente German‐Soto & Konstantin Gluschenko, 2023. "Long‐term regional convergence in Mexico: A new look," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 963-991, May.
    6. Clements, Benedict J. & Gupta, Sanjeev & Khamidova, Saida, 2021. "Is military spending converging to a low level across countries?," Economic Modelling, Elsevier, vol. 94(C), pages 433-441.
    7. Jakub Bartak & Agnieszka Jastrzębska, 2022. "Mining patterns of transitional growth using multivariate concept-based models," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(6), pages 4395-4419, December.
    8. Panagiotidis, Theodore & Papapanagiotou, Georgios & Stengos, Thanasis, 2023. "Dying together: A convergence analysis of fatalities during COVID-19," The Journal of Economic Asymmetries, Elsevier, vol. 28(C).
    9. Paul Johnson & Chris Papageorgiou, 2020. "What Remains of Cross-Country Convergence?," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 129-175, March.
    10. Niccolò Comerio & Fausto Pacicco, 2024. "The role of tourism in reducing economic inequalities: the case of Italy," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 41(3), pages 839-880, October.
    11. Athanasios Anastasiou & Nicholas Apergis & Athina Zervoyianni, 2024. "Pandemic, sentiments over COVID-19, and EU convergence," Empirical Economics, Springer, vol. 66(4), pages 1683-1707, April.
    12. Corrado, L. & Stengos, T. & Weeks, M. & Ege Yazgan, M., 2018. "Robust Tests for Convergence Clubs," Cambridge Working Papers in Economics 1873, Faculty of Economics, University of Cambridge.
    13. German-Soto, Vicente & Gluschenko, Konstantin, 2021. "Long-Run Cross-State Growth Comparison in Mexico," MPRA Paper 109015, University Library of Munich, Germany.
    14. Abreha,Kaleb & Rafael Amaral Ornelas & Gabriel Roberto Zaourak, 2024. "Regional Convergence in Brazil," Policy Research Working Paper Series 10904, The World Bank.

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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