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The legendary 2% convergence parameter: flexible or fixed?

Author

Listed:
  • Mariusz Próchniak

    (Szkoła Główna Handlowa w Warszawie)

  • Bartosz Witkowski

    (Szkoła Główna Handlowa w Warszawie)

Abstract

The study analyzes the time stability of the beta convergence coefficient for the EU28 countries over the 1992–2012 period which is divided into seventeen 5‐year overlapping subperiods. The basic convergence model is estimated with the use of GMM system estimator and a variety of control variables which are typical growth factors. It turns out that the average value of β-coefficient is 6.10% which indicates quite a rapid pace of convergence. However, it is not appropriate to claim about a constant rate of convergence over time among the EU countries as β-parameter was changing over time. After some trough in the second half of the 1990s, it was observed a gradual acceleration of the pace of the catching‐up process in the 2000s and 2010s.

Suggested Citation

  • Mariusz Próchniak & Bartosz Witkowski, 2014. "The legendary 2% convergence parameter: flexible or fixed?," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 34, pages 227-243.
  • Handle: RePEc:sgh:annals:i:34:y:2014:p:227-243
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