Bayesian average of classical estimates for panel data: Can the puzzle of the shape of the regional Kuznets curve be solved?

Andrés Ramírez-Hassan (), Carlos Mendez () and Estephania Rueda-Ramírez ()
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Andrés Ramírez-Hassan: OMEGA Research Group, Universidad EAFIT
Carlos Mendez: Nagoya University
Estephania Rueda-Ramírez: Universidad EAFIT
Authors registered in the RePEc Author Service: Estephania Rueda Ramírez

Empirical Economics, 2025, vol. 69, issue 2, No 6, 735-754

Abstract: Abstract We evaluate the robustness of the regional Kuznets curve using the Bayesian average of classical estimates for panel data and identify the robust determinants of regional inequality. Our simulation exercise suggests that this method recovers the variables underlying the true data generating process. Our results indicate that in addition to real GDP per capita, linear and quadratic, the most robust determinants of regional inequality are natural resource rents, arable land and ethnic inequality. We find an inverted-U-shaped relationship between regional inequality and national development in the range of USD 189 to USD 71,682. Beyond this threshold, there is evidence suggesting inequality stabilization.

Keywords: Bayesian model average; Kuznets curve; Regional inequality (search for similar items in EconPapers)
JEL-codes: C11 D31 O18 R58 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-025-02755-8

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