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Regional income convergence in the Scandinavian countries

Author

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  • Bentzen, Jan

    () (Department of Economics, Aarhus School of Business)

  • Smith, Valdemar

    () (Department of Economics, Aarhus School of Business)

Abstract

Using regional income data covering the time period since the early 1970s for all regions of the Scandinavian countries the often addressed topic of income convergence is tested. The empirical part of the paper applies different tests of convergence which are usually appearing in connection with the question of convergence in relation to neoclassical growth models. Following Sala-i-Martin the so-called beta-convergence test is applied but due to methodological problems associated with this technique, alternative time series tests are also considered. The newly introduced test by Nahar and Inder is applied to the income data, where this methodology allows for a less restrictive interpretation of convergence in a time series context compared to e.g. the Bernard-Durlauf unit root types of test. The time series tests indicate that there is most support to the notion of absolute convergence in real incomes among the regions of the Scandinavian countries in the sense that incomes converge towards the region with the highest ‘leading’ income level (the 'leader').

Suggested Citation

  • Bentzen, Jan & Smith, Valdemar, 2003. "Regional income convergence in the Scandinavian countries," Working Papers 03-20, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2003_020
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    File URL: http://www.hba.dk/fsk/pdfs/0003157.pdf
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    References listed on IDEAS

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    1. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    2. Loewy, Michael B. & Papell, David H., 1996. "Are U.S. regional incomes converging? Some further evidence," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 587-598, December.
    3. Carlino, Gerald & Mills, Leonard, 1996. "Are U.S. regional incomes converging? Reply," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 599-601, December.
    4. Bernard, Andrew B. & Durlauf, Steven N., 1996. "Interpreting tests of the convergence hypothesis," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 161-173.
    5. Miriam Camarero & Vicente Esteve & Cecilio Tamarit, 2000. "Price convergence of peripheral European countries on the way to the EMU: A time series approach," Empirical Economics, Springer, vol. 25(1), pages 149-168.
    6. Bernard, Andrew B & Durlauf, Steven N, 1995. "Convergence in International Output," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-108, April-Jun.
    7. S. Nahar & B. Inder, 2002. "Testing convergence in economic growth for OECD countries," Applied Economics, Taylor & Francis Journals, vol. 34(16), pages 2011-2022.
    8. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
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    Cited by:

    1. Evan Lau & Koon Po Lee, 2008. "Interdependence of income between China and ASEAN-5 countries," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 1(2), pages 148-161, June.
    2. Tiiu Paas & Friso Schittle & Andres Kuusk, "undated". "Modelling Regional Income Convergence in EU-25," Regional and Urban Modeling 283600067, EcoMod.
    3. Cornett, Andreas P. & Sørensen, Nils Karl, 2008. "International vs. Intra-national Convergence in Europe – an Assessment of Causes and Evidence," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 13, pages 35-56.

    More about this item

    Keywords

    Scandinavian countries; Regional income; Convergence;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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