IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_690.html
   My bibliography  Save this paper

Threshold Effects and Regional Economic Growth – Evidence from West Germany

Author

Listed:
  • Michael Funke
  • Annekatrin Niebuhr

Abstract

We study an overlapping generations model of human capital accumulation with threshold effects using regional data for West Germany. Our basic goal is to shed light on what makes German regions grow. The paper finds that the relative income distribution appears to be stratifying into a trimodal distribution. Thus, application of the threshold model to a real world case, here West Germany, shows that the model might help to explain regional growth patterns.

Suggested Citation

  • Michael Funke & Annekatrin Niebuhr, 2002. "Threshold Effects and Regional Economic Growth – Evidence from West Germany," CESifo Working Paper Series 690, CESifo.
    • Handle: RePEc:ces:ceswps:_690
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo_wp690.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    2. Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-1055, July.
    3. Birgit Gehrke & Harald Legler, 1998. "Regional Concentration of Innovative Potential in Western Germany," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 67(2), pages 99-112.
    4. Bala, Venkatesh & Sorger, Gerhard, 2001. "A Spatial-Temporal Model of Human Capital Accumulation," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 153-179, January.
    5. Quah, Danny, 1997. "Empirics for growth and distribution," LSE Research Online Documents on Economics 2138, London School of Economics and Political Science, LSE Library.
    6. Bernard, Andrew B. & Durlauf, Steven N., 1996. "Interpreting tests of the convergence hypothesis," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 161-173.
    7. Durlauf, Steven N & Johnson, Paul A, 1995. "Multiple Regimes and Cross-Country Growth Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 365-384, Oct.-Dec..
    8. Yin-Wong Cheung & Antonio Garcia Pascual, 2004. "Testing for output convergence: a re-examination," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 45-63, January.
    9. Boyan Jovanovic & Rafael Rob, 1989. "The Growth and Diffusion of Knowledge," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 569-582.
    10. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 563-606.
    11. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    12. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    13. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
    14. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High Are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86, National Bureau of Economic Research, Inc.
    15. Bai, Jushan, 1997. "Estimating Multiple Breaks One at a Time," Econometric Theory, Cambridge University Press, vol. 13(3), pages 315-352, June.
    16. Goddard, John & Wilson, John, 2001. "Cross sectional and panel estimation of convergence," Economics Letters, Elsevier, vol. 70(3), pages 327-333, March.
    17. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
    18. Fabio Canova, 2004. "Testing for Convergence Clubs in Income Per Capita: A Predictive Density Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 49-77, February.
    19. Beise, Marian & Egeln, Jürgen & Gehrke, Birgit & Legler, Harald & Licht, Georg & Machate-Weiß, Veronika & Schasse, Ulrich & Steincke, Manfred, 1998. "Zur regionalen Konzentration von Innovationspotentialen in Deutschland: Studie im Auftrag des BMBF," ZEW Dokumentationen 98-09, ZEW - Leibniz Centre for European Economic Research.
    20. Bai, Jushan, 1999. "Likelihood ratio tests for multiple structural changes," Journal of Econometrics, Elsevier, vol. 91(2), pages 299-323, August.
    21. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    22. Durlauf, Steven N., 2001. "Manifesto for a growth econometrics," Journal of Econometrics, Elsevier, vol. 100(1), pages 65-69, January.
    23. de la Fuente, Angel, 1997. "The empirics of growth and convergence: A selective review," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 23-73, January.
    24. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
    25. Azariadis, Costas, 1996. "The Economics of Poverty Traps: Part One: Complete Markets," Journal of Economic Growth, Springer, vol. 1(4), pages 449-496, December.
    26. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 501-526.
    27. Quah, Danny, 1996. "Twin peaks : growth and convergence in models of distribution dynamics," LSE Research Online Documents on Economics 2278, London School of Economics and Political Science, LSE Library.
    28. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-389, September.
    29. anonymous, 1987. "Comments requested by September 30, 1987," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Oct, pages 787-788.
    30. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    31. Danny Quah, 1997. "Empirics for Growth and Distribution," CEP Discussion Papers dp0324, Centre for Economic Performance, LSE.
    32. 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.
    33. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    34. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roberta Colavecchio & Declan Curran & Michael Funke, 2009. "Drifting together or falling apart? The empirics of regional economic growth in post-unification Germany," Applied Economics, Taylor & Francis Journals, vol. 43(9), pages 1087-1098.
    2. Antoni, 2015. "The dynamic relationship between money supply and economic growth," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 7(2), pages 78-92, April.
    3. Emiliano Giudici & André Mollick, 2008. "Convergence in the Eastern Caribbean States," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(4), pages 893-909, December.
    4. Mei-Hui Wang & Tai-Hsin Huang, 2009. "Threshold effects of financial status on the cost frontiers of financial institutions in nondynamic panels," Applied Economics, Taylor & Francis Journals, vol. 41(26), pages 3389-3401.
    5. Hans-Friedrich Eckey & Reinhold Kosfeld & Matthias Türck, 2007. "Regional Convergence in Germany: a Geographically Weighted Regression Approach," Spatial Economic Analysis, Taylor & Francis Journals, vol. 2(1), pages 45-64.
    6. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations : Evidence from the Belgian Firm's Data," Other publications TiSEM d78bf59a-e0ff-4451-86b9-1, Tilburg University, School of Economics and Management.
    7. Koetter, Michael & Wedow, Michael, 2008. "Does regional redistribution spur growth?," Discussion Paper Series 1: Economic Studies 2008,28, Deutsche Bundesbank.
    8. Magdalena Osinska & Tadeusz Kufel & Marcin Blazejowski & Pawel Kufel, 2016. "Modelling and Forecasting Business Cycle in CEE Countries using a Threshold Approach," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 16, pages 145-164.
    9. Straubhaar, Thomas & Suhrcke, Marc & Urban, Dieter, 2002. "Divergence - Is it Geography?," Discussion Paper Series 26350, Hamburg Institute of International Economics.
    10. Arbia, Giuseppe & Battisti, Michele & Di Vaio, Gianfranco, 2010. "Institutions and geography: Empirical test of spatial growth models for European regions," Economic Modelling, Elsevier, vol. 27(1), pages 12-21, January.
    11. Magdalena Osińska & Tadeusz Kufel & Marcin Błażejowski & Paweł Kufel, 2020. "Modeling mechanism of economic growth using threshold autoregression models," Empirical Economics, Springer, vol. 58(3), pages 1381-1430, March.
    12. Koetter, Michael & Wedow, Michael, 2010. "Finance and growth in a bank-based economy: Is it quantity or quality that matters?," Journal of International Money and Finance, Elsevier, vol. 29(8), pages 1529-1545, December.
    13. Don J Webber & Gail A Webber & Sebastian Berger & Peter Bradley, 2018. "Explaining productivity in a poor productivity region," Environment and Planning A, , vol. 50(1), pages 157-174, February.
    14. repec:elg:eechap:14395_11 is not listed on IDEAS
    15. R. Basile & S. Usai, 2012. "Analysis of regional endogenous growth," Working Paper CRENoS 201211, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    16. Michael Koetter & Michael Wedow, 2013. "Transfer Payments without Growth: Evidence for German Regions, 1992–2005," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 37(4), pages 1438-1455, July.
    17. Stefano Usai & Raffaele Paci, 2003. "Externalities and Local Economic Growth in Manufacturing Industries," Advances in Spatial Science, in: Bernard Fingleton (ed.), European Regional Growth, chapter 10, pages 293-321, Springer.
    18. Hierro, Mara & Maza, Adolfo, 2009. "Structural shifts in the dynamics of the European income distribution," Economic Modelling, Elsevier, vol. 26(3), pages 733-739, May.
    19. Koetter, Michael & Poghosyan, Tigran, 2010. "Real estate prices and bank stability," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1129-1138, June.
    20. Marcos Sanso-Navarro & Maria Vera-Cabello, 2015. "The effects of knowledge and innovation on regional growth: Nonparametric evidence," ERSA conference papers ersa15p949, European Regional Science Association.
    21. Zha, Donglan & Ding, Ning, 2015. "Threshold characteristic of energy efficiency on substitution between energy and non-energy factors," Economic Modelling, Elsevier, vol. 46(C), pages 180-187.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Azomahou, Théophile T. & El ouardighi, Jalal & Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2011. "Testing convergence of European regions: A semiparametric approach," Economic Modelling, Elsevier, vol. 28(3), pages 1202-1210, May.
    2. Cem Ertur & Julie Le Gallo & Catherine Baumont, 2006. "The European Regional Convergence Process, 1980-1995: Do Spatial Regimes and Spatial Dependence Matter?," International Regional Science Review, , vol. 29(1), pages 3-34, January.
    3. Nicholas Apergis & Christina Christou & Stephen Miller, 2012. "Convergence patterns in financial development: evidence from club convergence," Empirical Economics, Springer, vol. 43(3), pages 1011-1040, December.
    4. Marco Alfo & Giovanni Trovato & Robert J. Waldmann, 2008. "Testing for country heterogeneity in growth models using a finite mixture approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(4), pages 487-514.
    5. Barrientos Quiroga, Paola Andrea, 2013. "Convergence Clubs determined by Economic History in Latin America," MPRA Paper 50191, University Library of Munich, Germany.
    6. Paul Johnson & Chris Papageorgiou, 2020. "What Remains of Cross-Country Convergence?," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 129-175, March.
    7. Durlauf,S.N., 2003. "The convergence hypothesis after 10 years," Working papers 6, Wisconsin Madison - Social Systems.
    8. Semmler, Willi & Ofori, Marvin, 2007. "On poverty traps, thresholds and take-offs," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 1-26, March.
    9. Fulvio Castellacci, 2007. "Evolutionary And New Growth Theories. Are They Converging?," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 585-627, July.
    10. Silvia Dal Bianco, 2016. "Going clubbing in the eighties: convergence in manufacturing sectors at a glance," Empirical Economics, Springer, vol. 50(2), pages 623-659, March.
    11. Sulekha Hembram & Souparna Maji & Sushil Kr. Haldar, 2019. "Club Convergence among the Major Indian States During 1982–2014: Does Investment in Human Capital Matter?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 20(2), pages 184-204, September.
    12. Young, Andrew T. & Higgins, Matthew J. & Levy, Daniel, 2013. "Heterogeneous Convergence," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 120(2), pages 238-241.
    13. Markus Eberhardt & Francis Teal, 2008. "Modeling Technology and Technological Change in Manufacturing: How do Countries Differ?," CSAE Working Paper Series 2008-12, Centre for the Study of African Economies, University of Oxford.
    14. BRIDA, Juan Gabriel & GARRIDo, Nicolas & MUREDDU, Francesco, 2014. "Club Performance Dynamics At Italian Regional Level," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 14(1), pages 47-68.
    15. Cristina D. Checherita, 2009. "Variations on economic convergence: The case of the United States," Papers in Regional Science, Wiley Blackwell, vol. 88(2), pages 259-278, June.
    16. Juan Brida & Nicolás Garrido & Francesco Mureddu, 2014. "Italian economic dualism and convergence clubs at regional level," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 439-456, January.
    17. Lehmann, Hartmut & Silvagni, Maria Giulia, 2013. "Is There Convergence of Russia's Regions? Exploring the Empirical Evidence: 1995–2010," IZA Discussion Papers 7603, Institute of Labor Economics (IZA).
    18. Chang-Yang Lee, 2012. "Learning-by-doing in R&D, knowledge threshold, and technological divide," Journal of Evolutionary Economics, Springer, vol. 22(1), pages 109-132, January.
    19. Li, Kui-Wai & Zhou, Xianbo & Pan, Zhewen, 2016. "Cross-country output convergence and growth: Evidence from varying coefficient nonparametric method," Economic Modelling, Elsevier, vol. 55(C), pages 32-41.
    20. Sergio J. Rey & Mark V. Janikas, 2003. "Convergence and space," Urban/Regional 0311002, University Library of Munich, Germany, revised 16 Nov 2003.

    More about this item

    Keywords

    regional economic growth; human capital; Germany;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_690. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.