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Real Convergence in Europe: A Cluster Analysis

  • Juan Carlos Cuestas

    ()

    (Department of Economics, The University of Sheffield)

  • Mercedes Monfort

    (Jaume I University, Spain)

  • Javier Ordóñez

    (University of Bath)

In this paper we analyse real convergence in GDP per worker in the EU member states. The aim is to test whether there is evidence of club convergence in the EU, i.e. divergence in GDP per worker. Evidence in favour of cluster or club convergence may be an indication of significant productivity divergences between countries, which may also explain the current turmoil in the euro zone. The results show evidence of different economic growth rates within Europe, which also converge to different steady states, implying divergence in the EU-14. Within the EU-14 member states we observe two convergence clubs, which are not related to the fact that some countries belong to the euro area. Furthermore, Eastern European countries are also divided in two clubs, with a more direct effect of belonging to the euro zone in the composition of the clubs.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2012_023.html
File Function: First version, 2012
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2012023.

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Length: 24 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:shf:wpaper:2012023
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