Investigating the Presence of Regional Economic Growth Convergence in the Philippines using Kalman Filter
This paper investigates the presence of stochastic and dynamic convergence of the 14 regional economies in the Philippines in terms of per capita Gross Regional Domestic Product (GRDP) using regional panel data from 1988 to 2007. Stochastic convergence, which indicates convergence of regions in the long-run, is tested using Levin, Lin & Chu (LLC) and Im, Pesaran & Shin (IPS) panel unit root tests. The presence of convergence, on one hand, indicates that the economically laggard regions are gaining on the economically better-performing regions with respect to per capita GRDP. On the other hand, the lack of convergence indicates a need to reevaluate existing regional and national economic policies on development. Dynamic convergence reveals several convergence characteristics of individual regions over time. Dynamic convergence is determined by the time-varying parameter (TVP) model derived using the Kalman Filter. The paper proceeds to examine the individual convergence behavior of each region based on the value of the estimate of the parameter of the TVP. The results show that out of the 14 regions studied, seven regions are found to converge towards the average of the national per capita GDP growth rate over 1988 to 2007 while six regions lag behind the average of the national per capita GDP growth rate over the same period. No region converges towards the economic growth rate of National Capital Region, the lead region used in the study.
|Date of creation:||Jan 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003.
"Testing for unit roots in heterogeneous panels,"
Journal of Econometrics,
Elsevier, vol. 115(1), pages 53-74, July.
- Tom Doan, . "IPSHIN: RATS procedure to implement Im, Pesaran and Shin panel unit root test," Statistical Software Components RTS00098, Boston College Department of Economics.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
- Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002.
"Unit root tests in panel data: asymptotic and finite-sample properties,"
Journal of Econometrics,
Elsevier, vol. 108(1), pages 1-24, May.
- Tom Doan, . "LEVINLIN: RATS procedure to perform Levin-Lin-Chu test for unit roots in panel data," Statistical Software Components RTS00242, Boston College Department of Economics.
- Manasan, Rosario G. & Mercado, Ruben G., 1999. "Regional Economic Growth and Convergence in the Philippines: 1975-1997," Discussion Papers DP 1999-13, Philippine Institute for Development Studies.
- Michael Beenstock & Daniel Felsenstein, 2008. "Regional Heterogeneity, Conditional Convergence and Regional Inequality," Regional Studies, Taylor & Francis Journals, vol. 42(4), pages 475-488.
- Orbeta, Aniceto Jr. C. & Manasan, Rosario G. & de Guzman, Generoso & Reyes, Celia M., 1999. "Social Impact of the Regional Financial Crisis in the Philippines," Discussion Papers DP 1999-14, Philippine Institute for Development Studies.
- Mercado, Ruben G., 2002. "Regional Development in the Philippines: A Review of Experience, State of the Art and Agenda for Research and Action," Discussion Papers DP 2002-03, Philippine Institute for Development Studies.
- Austria, Myrna S., 2000. "Assessing the Competitiveness of the Philippine IT Industry," Discussion Papers DP 2000-03, Philippine Institute for Development Studies.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:20681. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.