Investigating the Convergence Hypothesis in the Eu: More Evidence Accounting for Structural Breaks

Xanthippi Chapsa (), Constantinos Katrakilidis and Nikolaos Tabakis ()
Additional contact information
Xanthippi Chapsa: Aristotle University of Thessaloniki and Technological Educational Institute of Serres
Nikolaos Tabakis: Technological Educational Institute of Thessaloniki

A chapter in EU Crisis and the Role of the Periphery, 2015, pp 21-39 from Springer

Abstract: Abstract The aim of this paper is to test the convergence hypothesis for the EU countries with Netherlands which is considered as the benchmark. The empirical analysis uses Gross Domestic Product (GDP) per capita in Purchasing Power Parity (PPP) in constant prices of 2005 and covers the period 1950–2010. The empirical approach complementarily employs unit root tests for stochastic convergence and a test proposed by Tomljanovich and Vogelsang (Empirical Econ 27: 49–62, 2002) and Nieswiadomy and Strazicich (Econ Inq 42: 323–340, 2004) that is based on Carlino and Mills’ (J Monet Econ 32: 335–346, 1993) methodology. Applying the unit root tests for the relative per capita real GDP series for each country, we are able to reject the unit root hypothesis for 6 out of 14 countries. However, our results suggest there is stronger evidence in favor of convergence when we account for one or two endogenous structural breaks in the intercept and slope of the trend function. Based on Carlino and Mills methodology, we found strong evidence of a catch-up process until the mid-1980 towards the Netherlands for all countries except for the UK, although, after 1985, it is clear that the economies show different behavior which is probably associated with differences in the growth process.

Keywords: Stochastic convergence; β-convergence; Trend test; Structural breaks; O470; O520; P51 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (4)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-319-10133-0_2

Ordering information: This item can be ordered from
http://www.springer.com/9783319101330

DOI: 10.1007/978-3-319-10133-0_2

Access Statistics for this chapter

More chapters in Contributions to Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().