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Real convergence in Europe: A cluster analysis

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  • Monfort, Mercedes
  • Cuestas, Juan Carlos
  • Ordóñez, Javier

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.

Suggested Citation

  • Monfort, Mercedes & Cuestas, Juan Carlos & Ordóñez, Javier, 2013. "Real convergence in Europe: A cluster analysis," Economic Modelling, Elsevier, vol. 33(C), pages 689-694.
  • Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:689-694
    DOI: 10.1016/j.econmod.2013.05.015
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    More about this item

    Keywords

    Cluster; Real convergence; Economic integration; Euro;

    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
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal 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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