SEMI-PARAMETRIC SPATIAL AUTO-COVARIANCE MODELS OF REGIONAL GROWTH IN EUROPE

Roberto Basile () and Bernard Gress
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Bernard Gress: Department of Economics, University of California Riverside, Riverside, California

Region et Developpement, 2005, vol. 21, 93-118

Abstract: We propose a semi-parametric spatial auto-covariance specification of the growth model to examine the growth behaviour of European regions in the period 1988-2000. This specification simultaneously takes account of the problems of non-linearities and spatial dependence. We obtain two main results. First, there is a trade-off between the identification of non-linearities and the estimation of the spatial parameters. Second, even when controlling for spatial dependence, there is evidence of strong non-linearity between regional growth and its predictors. In particular, the relation between growth and unemployment is negative but not globally linear: regions with an unemployment rate over a certain threshold appear to be 'locked' within an 'underdevelopment trap' with similar lower growth rates.

Keywords: REGIONAL CONVERGENCE; EUROPE; SPATIAL ECONOMETRICS; MULTIPLE REGIMES; SEMI-PARAMETRIC MODELS (search for similar items in EconPapers)
JEL-codes: C13 C14 O40 O52 R11 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:tou:journl:v:21:y:2005:p:93-118

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