IDEAS home Printed from https://ideas.repec.org/a/kap/ecopln/v57y2024i3d10.1007_s10644-024-09715-9.html
   My bibliography  Save this article

Understanding EU regional macroeconomic tipping points using panel threshold technique

Author

Listed:
  • Saptorshee Kanto Chakraborty

    (Paris School of Economics)

  • Antoine Mandel

    (Climate Finance Alpha and Paris School of Economics, University Paris 1)

Abstract

The primary objective of the European Union has been to bring cohesion among its member states and their respective regions. This has led the European Union to introduce structural funds of various types. Since the last decade, these structural funds have also been used to combat climate change via human capital and green investments. Our main objective is to analyse how these structural funds have impacted EU regional economic growth patterns. We use a novel heterogeneous panel estimator of C-Lasso type, conclude with two groups and find the definitive impact of structural funds towards regional economic growth. We then check the impact of the regional European emission trading system and European pollution registry system on economic growth using a panel threshold regression which uses a latent group structure. In doing so, we find two groups in our sample and the presence of threshold levels both with and without latent groups.

Suggested Citation

  • Saptorshee Kanto Chakraborty & Antoine Mandel, 2024. "Understanding EU regional macroeconomic tipping points using panel threshold technique," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-30, June.
    • Handle: RePEc:kap:ecopln:v:57:y:2024:i:3:d:10.1007_s10644-024-09715-9
    DOI: 10.1007/s10644-024-09715-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10644-024-09715-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10644-024-09715-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Sascha O. Becker & Peter H. Egger & Maximilian von Ehrlich, 2013. "Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 29-77, November.
    3. Riccardo Crescenzi & Mara Giua, 2020. "One or many Cohesion Policies of the European Union? On the differential economic impacts of Cohesion Policy across member states," Regional Studies, Taylor & Francis Journals, vol. 54(1), pages 10-20, January.
    4. Richard Harris, 2011. "Models Of Regional Growth: Past, Present And Future," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 913-951, December.
    5. Enrique Garcilazo & Joaquim Oliveira Martins, 2015. "The Contribution of Regions to Aggregate Growth in the OECD," Economic Geography, Taylor & Francis Journals, vol. 91(2), pages 205-221, April.
    6. Cornelius Bähr, 2008. "How does Sub‐National Autonomy Affect the Effectiveness of Structural Funds?," Kyklos, Wiley Blackwell, vol. 61(1), pages 3-18, February.
    7. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    8. Kapetanios, G. & Pesaran, M. Hashem & Yamagata, T., 2011. "Panels with non-stationary multifactor error structures," Journal of Econometrics, Elsevier, vol. 160(2), pages 326-348, February.
    9. Sebastien Bourdin, 2019. "Does the Cohesion Policy Have the Same Influence on Growth Everywhere? A Geographically Weighted Regression Approach in Central and Eastern Europe," Economic Geography, Taylor & Francis Journals, vol. 95(3), pages 256-287, May.
    10. repec:dau:papers:123456789/14816 is not listed on IDEAS
    11. Liangjun Su & Zhentao Shi & Peter C. B. Phillips, 2016. "Identifying Latent Structures in Panel Data," Econometrica, Econometric Society, vol. 84, pages 2215-2264, November.
    12. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 235-260.
    13. Giuseppe Arbia & Julie Le Gallo & Gianfranco Piras, 2008. "Does Evidence on Regional Economic Convergence Depend on the Estimation Strategy? Outcomes from Analysis of a Set of NUTS2 EU Regions," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(2), pages 209-224.
    14. Sjef Ederveen & Henri L . F. Groot & Richard Nahuis, 2006. "Fertile Soil for Structural Funds?A Panel Data Analysis of the Conditional Effectiveness of European Cohesion Policy," Kyklos, Wiley Blackwell, vol. 59(1), pages 17-42, February.
    15. Moon, Hyungsik Roger & Weidner, Martin, 2017. "Dynamic Linear Panel Regression Models With Interactive Fixed Effects," Econometric Theory, Cambridge University Press, vol. 33(1), pages 158-195, February.
    16. Carlos Pinho & Celeste Varum & Micaela Antunes, 2015. "Under What Conditions Do Structural Funds Play a Significant Role in European Regional Economic Growth? Some Evidence from Recent Panel Data," Journal of Economic Issues, Taylor & Francis Journals, vol. 49(3), pages 749-771, July.
    17. Alexander Chudik & M. Hashem Pesaran & Elisa Tosetti, 2011. "Weak and strong cross‐section dependence and estimation of large panels," Econometrics Journal, Royal Economic Society, vol. 14(1), pages 45-90, February.
    18. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    19. Andrés Rodríguez-Pose & Lewis Dijkstra, 2021. "Does Cohesion Policy reduce EU discontent and Euroscepticism?," Regional Studies, Taylor & Francis Journals, vol. 55(2), pages 354-369, February.
    20. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    21. Jushan Bai & Serena Ng, 2004. "A PANIC Attack on Unit Roots and Cointegration," Econometrica, Econometric Society, vol. 72(4), pages 1127-1177, July.
    22. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    23. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    24. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    25. Joakim Westerlund, 2005. "New Simple Tests for Panel Cointegration," Econometric Reviews, Taylor & Francis Journals, vol. 24(3), pages 297-316.
    26. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    27. Robert J. Barro & Xavier Sala-I-Martin, 1992. "Public Finance in Models of Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 645-661.
    28. Chudik, Alexander & Pesaran, M. Hashem, 2015. "Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors," Journal of Econometrics, Elsevier, vol. 188(2), pages 393-420.
    29. Lewis Dijkstra & Enrique Garcilazo & Philip McCann, 2015. "The effects of the global financial crisis on European regions and cities," Journal of Economic Geography, Oxford University Press, vol. 15(5), pages 935-949.
    30. Augusto Cerqua & Guido Pellegrini, 2018. "Are we spending too much to grow? The case of Structural Funds," Journal of Regional Science, Wiley Blackwell, vol. 58(3), pages 535-563, June.
    31. Seo, Myung Hwan & Shin, Yongcheol, 2016. "Dynamic panels with threshold effect and endogeneity," Journal of Econometrics, Elsevier, vol. 195(2), pages 169-186.
    32. Pesaran, M. Hashem, 2015. "Time Series and Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780198759980, Decembrie.
    33. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    34. Roberto Esposti & Stefania Bussoletti, 2008. "Impact of Objective 1 Funds on Regional Growth Convergence in the European Union: A Panel-data Approach," Regional Studies, Taylor & Francis Journals, vol. 42(2), pages 159-173.
    35. Alexander Chudik & M. Hashem Pesaran, 2013. "Large Panel Data Models with Cross-Sectional Dependence: A Survey," CESifo Working Paper Series 4371, CESifo.
    36. Roberto Camagni & Roberta Capello & Silvia Cerisola & Ugo Fratesi, 2020. "Fighting Gravity: Institutional Changes and Regional Disparities in the EU," Economic Geography, Taylor & Francis Journals, vol. 96(2), pages 108-136, March.
    37. Huang, Wenxin & Jin, Sainan & Phillips, Peter C.B. & Su, Liangjun, 2021. "Nonstationary panel models with latent group structures and cross-section dependence," Journal of Econometrics, Elsevier, vol. 221(1), pages 198-222.
    38. Miao, Ke & Su, Liangjun & Wang, Wendun, 2020. "Panel threshold regressions with latent group structures," Journal of Econometrics, Elsevier, vol. 214(2), pages 451-481.
    39. Jushan Bai, 2009. "Panel Data Models With Interactive Fixed Effects," Econometrica, Econometric Society, vol. 77(4), pages 1229-1279, July.
    40. Luisa Gagliardi & Marco Percoco, 2017. "The impact of European Cohesion Policy in urban and rural regions," Regional Studies, Taylor & Francis Journals, vol. 51(6), pages 857-868, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, February.
    2. Tobias Hagen & Philipp Mohl, 2011. "Econometric Evaluation of EU Cohesion Policy: A Survey," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 16, Edward Elgar Publishing.
    3. Mohl, P. & Hagen, T., 2010. "Do EU structural funds promote regional growth? New evidence from various panel data approaches," Regional Science and Urban Economics, Elsevier, vol. 40(5), pages 353-365, September.
    4. Panagiotis KOUDOUMAKIS & George BOTZORIS & Angelos PROTOPAPAS, 2021. "The Contribution Of Cohesion Policy To The Development And Convergence Of The Regions Of The European Union," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 277-290, June.
    5. Markus Eberhardt & Francis Teal, 2020. "The Magnitude of the Task Ahead: Macro Implications of Heterogeneous Technology," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 334-360, June.
    6. Markus Eberhardt & Francis Teal, 2008. "Modeling Technology and Technological Change in Manufacturing: How do Countries Differ?," CSAE Working Paper Series 2008-12, Centre for the Study of African Economies, University of Oxford.
    7. Ignacio Sacristán López-Bravo & Carlos San Juan Mesonada, 2022. "Effects of Policy Mix on European Regional Convergence," EconPol Working Paper 73, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Paolo Di Caro & Ugo Fratesi, 2022. "One policy, different effects: Estimating the region‐specific impacts of EU cohesion policy," Journal of Regional Science, Wiley Blackwell, vol. 62(1), pages 307-330, January.
    9. Naima Chrid & Sami Saafi & Mohamed Chakroun, 2021. "Export Upgrading and Economic Growth: a Panel Cointegration and Causality Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 811-841, June.
    10. Carlos San Juan Mesonada & Carlos Sunyer Manteiga, 2021. "European Structural Funds and Resilient and Recovery Facility Governance," EconPol Working Paper 67, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    11. Lenkei, Balint & Mustafa, Ghulam & Vecchi, Michela, 2018. "Growth in emerging economies: Is there a role for education?," Economic Modelling, Elsevier, vol. 73(C), pages 240-253.
    12. Wang,Dieter, 2021. "Natural Capital and Sovereign Bonds," Policy Research Working Paper Series 9606, The World Bank.
    13. Mindaugas Butkus & Alma Maciulyte-Sniukiene & Renata Macaitiene & Kristina Matuzeviciute, 2021. "A New Approach to Examine Non-Linear and Mediated Growth and Convergence Outcomes of Cohesion Policy," Economies, MDPI, vol. 9(3), pages 1-28, July.
    14. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, 02.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ecopln:v:57:y:2024:i:3:d:10.1007_s10644-024-09715-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.