Regional Convergence and Aggregate Growth

Stéphane Adjemian, Jerome Glachant and Charles Vellutini ()
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Jerome Glachant: EPEE

No 1518, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: A striking feature of US states convergence is the link between the spatial speed of convergence and the aggregate growth rate: fast aggregate growth induces a reduction in regional inequalities. This paper uses a neoclassical growth framework with integrated economies in order to capture this phenomena. As it has been stressed by Ventura (1997), the interdependence between regional economies through the access to common markets generates a link between aggregate evolution and spatial convergence dynamics. The paper has two mains results. First, we show how deep parameters of the economy determines quantitatively the magnitude of this link. Second, we propose two directions for testing the model and we provide some empirical evidence using US states data on personal income. These results are mixed, only a part of the convergence pattern is well captured by the model.

Date: 2000-08-01
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Working Paper: Regional Convergence and Aggregate Growth (1999)
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