Economics at your fingertips  

Heterogeneity and Spatial Dependence of Regional Growth in the EU: A Recursive Partitioning Approach

Martin Wagner and Achim Zeileis

German Economic Review, 2019, vol. 20, issue 1, 67-82

Abstract: We use model‐based recursive partitioning to assess heterogeneity of growth and convergence processes based on economic growth regressions for 255 European Union NUTS2 regions from 1995 to 2005. Spatial dependencies are taken into account by augmenting the model‐based regression tree with a spatial lag. The starting point of the analysis is a human‐capital‐augmented Solow‐type growth equation similar in spirit to Mankiw et al. (1992, The Quarterly Journal of Economics, 107, 407–437). Initial GDP and the share of highly educated in the working age population are found to be important for explaining economic growth, whereas the investment share in physical capital is only significant for coastal regions in the PIIGS countries. For all considered spatial weight matrices recursive partitioning leads to a regression tree with four terminal nodes with partitioning according to (i) capital regions, (ii) non‐capital regions in or outside the so‐called PIIGS countries and (iii) inside the respective PIIGS regions furthermore between coastal and non‐coastal regions. The choice of the spatial weight matrix clearly influences the spatial lag parameter while the estimated slope parameters are very robust to it. This indicates that accounting for heterogeneity is an important aspect of modeling regional economic growth and convergence.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1465-6485

Access Statistics for this article

German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin

More articles in German Economic Review from Verein für Socialpolitik Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2019-07-22
Handle: RePEc:bla:germec:v:20:y:2019:i:1:p:67-82