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Does Income Converge among EU Member Countries following the Post-War Period? Evidence from the PANKPSS Test

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  • Burcu Ozcan

    () (Firat University, Faculty Of Economics And Administrative Sciences, Department Of Economics, 23200, Elazig, Turkey.)

Abstract

In this study, we examine both stochastic and deterministic convergence in the logarithm of the relative per capita income of eighteen EU countries. The panel stationary test developed by Carrion-i Silvestre et al. (2005) is employed over the period 1950-2010. The univariate results attained from the stochastic convergence test provide that convergence does hold for sixteen countries except for Bulgaria and Ireland. In addition, the findings of the deterministic convergence test render the evidence favourable to convergence in sixteen EU countries as well, except for Austria and Greece. In other words, the individual results from panel stationarity tests are mostly in support of income convergence among EU members. Furthermore, both types of convergence appear to hold for the entire EU panel set. Therefore, shocks to relative per capita income levels of EU countries appear to be temporary.

Suggested Citation

  • Burcu Ozcan, 2014. "Does Income Converge among EU Member Countries following the Post-War Period? Evidence from the PANKPSS Test," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 22-38, October.
  • Handle: RePEc:rjr:romjef:v::y:2014:i:3:p:22-38
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    More about this item

    Keywords

    catch-up; stochastic convergence; deterministic convergence; structural breaks; panel stationarity test;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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