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The Heterogeneity of Convergence in Transition Countries

Mateusz Pipieñ and Sylwia Roszkowska
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Mateusz Pipieñ: Department of Econometrics and Operations Research, Cracow University of Economics
Sylwia Roszkowska: Department of Macroeconomics, Faculty of Economics and Sociology, University of Lodz

No 7/2017, Lodz Economics Working Papers from University of Lodz, Faculty of Economics and Sociology

Abstract: For two groups of post-communist countries (CEE and CIS) we estimated the parameters of convergence equations on the basis of annual data. We depart from standard econometric theory, which involves panel regression techniques. We test cross-country heterogeneity of parameters within a system of Seemingly Unrelated Regression Equations (SURE). We show empirical evidence in favour of the variability of parameters describing the convergence effect and productivity growth rates across countries. Our approach seems a convincing alternative to the panel regression approach where random effects can be estimated, imposing an assumption about the constancy of structural parameters within the group of countries under analysis. We discuss the role of the global financial crisis in the heterogeneity of convergence processes and productivity at the country level. The aforementioned SURE model was estimated based on two datasets, one containing observations prior to the crisis and the second containing the whole sample

Keywords: convergence; labour productivity; economic growth; SURE (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-eff and nep-tra
Date: 2017-04
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