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Bayesian average of classical estimates for panel data: Can the puzzle of the shape of the regional Kuznets curve be solved?

Author

Listed:
  • Andrés Ramírez-Hassan

    (OMEGA Research Group, Universidad EAFIT)

  • Carlos Mendez

    (Nagoya University)

  • Estephania Rueda-Ramírez

    (Universidad EAFIT)

Abstract

We evaluate the robustness of the regional Kuznets curve using the Bayesian average of classical estimates for panel data and identify the robust determinants of regional inequality. Our simulation exercise suggests that this method recovers the variables underlying the true data generating process. Our results indicate that in addition to real GDP per capita, linear and quadratic, the most robust determinants of regional inequality are natural resource rents, arable land and ethnic inequality. We find an inverted-U-shaped relationship between regional inequality and national development in the range of USD 189 to USD 71,682. Beyond this threshold, there is evidence suggesting inequality stabilization.

Suggested Citation

  • Andrés Ramírez-Hassan & Carlos Mendez & Estephania Rueda-Ramírez, 2025. "Bayesian average of classical estimates for panel data: Can the puzzle of the shape of the regional Kuznets curve be solved?," Empirical Economics, Springer, vol. 69(2), pages 735-754, August.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:2:d:10.1007_s00181-025-02755-8
    DOI: 10.1007/s00181-025-02755-8
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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