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Convergence in the Agricultural Incomes: a Comparison between the US and EU

  • Brasili, Cristina
  • Fanfani, Roberto
  • Gutierrez, Luciano

In this paper we compare the changes in farm incomes in EU regions and US States between1989 and 2002. The aim of this comparative analysis is highlight the patterns of convergence or divergence and how they differ over time. We use two recent analytical instruments: non-stationary panel analysis and dynamic distribution analysis. Both tools overcome the problems involved in using standard cross-section analysis. The results of the non-stationary panel analysis show that the EU regions are converging, and that family farm income is converging faster than net added value. In the US states the analysis shows that substantial differences in farm income persist, and there are no evident signs of convergence. While, the regions are heterogeneous, we modified the analysis to allow for the concept of conditional convergence. The results show that the regions converge towards different levels of productivity but regions that are further from their steady-state level will grow faster.

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Paper provided by European Association of Agricultural Economists in its series 103rd Seminar, April 23-25, 2007, Barcelona, Spain with number 9397.

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Date of creation: 2007
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Handle: RePEc:ags:eaa103:9397
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  1. Evans, P, 1996. "Using Panel Data to Evaluate Growth Theories," ISER Discussion Paper 0397, Institute of Social and Economic Research, Osaka University.
  2. Yin-wong Cheung & Antonio Garcia-Pascual, 2004. "Testing for Output Convergence: A Re-examination," Working Papers 052004, Hong Kong Institute for Monetary Research.
  3. Hyungsik Roger MOON & Benoit PERRON, 2002. "Testing For A Unit Root In Panels With Dynamic Factors," Cahiers de recherche 18-2002, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.
  4. Jushan Bai & Serena Ng, 2002. "Determining the Number of Factors in Approximate Factor Models," Econometrica, Econometric Society, vol. 70(1), pages 191-221, January.
  5. Bernard, Andrew B. & Durlauf, Steven N., 1996. "Interpreting tests of the convergence hypothesis," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 161-173.
  6. Luciano Gutierrez, 2006. "Panel Unit-root Tests for Cross-sectionally Correlated Panels: A Monte Carlo Comparison," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 519-540, 08.
  7. Quah, Danny T, 1997. " Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
  8. Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
  9. Danny Quah, 1992. "Empirical Cross-Section Dynamics in Economic Growth," FMG Discussion Papers dp154, Financial Markets Group.
  10. L Gutierrez, 2000. "Convergence in US and EU agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(2), pages 187-206, June.
  11. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
  12. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
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