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Panel data analysis: convergence of Indian states with infrastructure

Flora Pandya () and Suresh Maind ()
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Flora Pandya: University of Mumbai
Suresh Maind: University of Mumbai

Journal of Social and Economic Development, 2017, vol. 19, issue 1, 181-195

Abstract: Abstract Augmented Solow model neoclassical growth theory framework is used with infrastructure. The poor economies tend to grow more because of diminishing returns to capital. The idea of conditional convergence used by Barro and Sala-i-Martin for the β-convergence of the steady state equilibrium is used for the Indian States and Union Territories with the infrastructure index. The panel data set is used for the analysis as it has more advantages over the cross section and time series data. The dynamic panel data are estimated using the fixed effect model and generalized methods of moments for the estimation for the period of 1990–1991 to 2010–2011. The dynamic panel data models are more consistent and efficient estimator with the generalized methods of moments than the fixed effect models. The infrastructure index and growth have significant positive relationship. The Barro and Sala-i-Martin version of the β-convergence holds for the Indian States and Union Territories a clear evidence of conditional convergence.

Keywords: Infrastructure index; Fixed effect; Generalized methods of moments; Conditional convergence (search for similar items in EconPapers)
JEL-codes: C01 C23 C33 O18 R11 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:spr:jsecdv:v:19:y:2017:i:1:d:10.1007_s40847-017-0033-3