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Bayesian Model Averaging in Modelling GDP Convergence with the Use of Panel Data

Author

Listed:
  • Mariusz Próchniak

    (Szkoła Główna Handlowa w Warszawie)

  • Bartosz Witkowski

    (Szkoła Główna Handlowa w Warszawie)

Abstract

In this paper, β convergence analysis for the 27 EU member countries and the 1993-2010 period is conducted. The analysis uses an Bayesian model averaging (BMA) approach applied to Blundell and Bond’s GMM system estimator with the existence of structural breaks. In order to account for the differences in the steady-states of the countries, 22 variables are tested as potential economic growth determinants. The structural breaks are expected to be in 1998 and 2004. The main finding is that the EU27 countries converged at the rate of about 5% per annum which is an enormous difference as compared with the widely cited 2% speed of convergence and the mechanism of conditional convergence was rather constant over time yet the influence of particular growth factors on GDP proved not to be stable anymore.

Suggested Citation

  • Mariusz Próchniak & Bartosz Witkowski, 2012. "Bayesian Model Averaging in Modelling GDP Convergence with the Use of Panel Data," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 26, pages 45-60.
  • Handle: RePEc:sgh:annals:i:26:y:2012:p:45-60
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    References listed on IDEAS

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    3. 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.
    4. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    5. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, September.
    6. Sarajevs, Vadims, 2001. "Convergence of European transition economies and the EU : What do the data show," BOFIT Discussion Papers 13/2001, Bank of Finland, Institute for Economies in Transition.
    7. Robert J. Barro & Rachel McCleary, 2003. "Religion and Economic Growth," NBER Working Papers 9682, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Michał Bernardelli, 2013. "Nieklasyczne modele Markowa w analizie cykli koniunktury gospodarczej w Polsce," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 30, pages 59-74.

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    More about this item

    Keywords

    convergence; economic growth; growth factors; bayesian averaging;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • 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

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