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Pan-European Regional Income Growth and Club-Convergence - Insights from a Spatial Econometric Perspective

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  • Manfred M. Fischer

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  • Claudia Stirböck

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Abstract

Club-convergence analysis provides a more realistic and detailed picture about regional income growth than traditional convergence analysis. This paper presents a spatial econometric framework for club-convergence testing that relates the concept of club-convergence to the notion of spatial heterogeneity. The study provides evidence for the club-convergence hypothesis in cross-regional growth dynamics from a pan-European perspective. The conclusions are threefold. First, we reject the standard Barro-style regression model which underlies most empirical work on regional income convergence, in favour of a two regime [club] alternative in which different regional economies obey different linear regressions when grouped by means of Getis and Ord's (1992) local clustering technique. Second, the results point to a heterogeneous pattern in the pan-European convergence process. Heterogeneity appears in both the convergence rate and the steady-state level. But, third, the study also reveals that spatial error dependence introduces an important bias in our perception of the club-convergence and shows that neglection of this bias would give rise to misleading conclusions.

Suggested Citation

  • Manfred M. Fischer & Claudia Stirböck, 2005. "Pan-European Regional Income Growth and Club-Convergence - Insights from a Spatial Econometric Perspective," ERSA conference papers ersa05p6, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa05p6
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa05/papers/6.pdf
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    Cited by:

    1. FE, Doukouré Charles, 2010. "Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA
      [Tariffs Reduction and Real Convergence in WAEMU]
      ," MPRA Paper 26763, University Library of Munich, Germany.
    2. Cem Ertur & Julie Le Gallo, 2008. "Regional Growth and Convergence: Heterogenous reaction versus interaction in spatial econometric approaches," Working Papers hal-00463274, HAL.

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