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Testing the stochastic convergence of Italian regions using panel data


  • Mauro Costantini
  • Giuseppe Arbia


This paper examines stochastic convergence in real per capita GDP for Italian regions using recent non-stationary panel data methodologies over the period 1951 to 2002. Economies stochastically converge when regional differences across economies are not persistent, and long-run movements in a region's real per capita GDP are driven by technological shocks. Four panel unit root tests are used to evaluate stochastic convergence and Monte Carlo simulation is performed to obtain critical values. The results indicate that there is no stochastic convergence among Italian regions. They also provide some evidence in favour of stochastic convergence of regions in the Northern part of Italy.

Suggested Citation

  • Mauro Costantini & Giuseppe Arbia, 2006. "Testing the stochastic convergence of Italian regions using panel data," Applied Economics Letters, Taylor & Francis Journals, vol. 13(12), pages 775-783.
  • Handle: RePEc:taf:apeclt:v:13:y:2006:i:12:p:775-783 DOI: 10.1080/13504850500425188

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    References listed on IDEAS

    1. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    2. Richard Levin & Peter C. Reiss, 1984. "Tests of a Schumpeterian Model of R&D and Market Structure," NBER Chapters,in: R&D, Patents, and Productivity, pages 175-208 National Bureau of Economic Research, Inc.
    3. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
    4. Drysdale, Peter & Huang, Yiping, 1997. "Technological Catch-up and Economic Growth in East Asia and the Pacific," The Economic Record, The Economic Society of Australia, vol. 73(222), pages 201-211, September.
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    Cited by:

    1. Seya, Hajime & Tsutsumi, Morito & Yamagata, Yoshiki, 2012. "Income convergence in Japan: A Bayesian spatial Durbin model approach," Economic Modelling, Elsevier, vol. 29(1), pages 60-71.
    2. Martinho, Vítor João Pereira Domingues, 2011. "Spatial autocorrelation and Verdoorn law in the Portuguese nuts III," MPRA Paper 32165, University Library of Munich, Germany.
    3. Sanghamitra Bandyopadhyay, 2016. "The persistence of inequality across Indian states," Working Papers 74, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    4. 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.

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