EconPapers    
Economics at your fingertips  
 

Regional Income Convergence in Europe, 1995-2000: A Spatial Econometric Perspective

Manfred Fischer and Claudia Stirböck

MPRA Paper from University Library of Munich, Germany

Abstract: Questions of convergence have received increasing attention in recent years, in light of the pressure for greater integration and enlargement of the European Union [EU] to countries in Central and Eastern Europe [CEE]. This paper looks at the evidence for convergence of per capita income between regions in Europe in the second half of the 1990s, when economic recovery in CEE gathered pace. The analysis is based on the simplest of the models, the unconditional ß-convergence model and shows that the classical test methodology is ill-designed due to two reasons. First, it cannot identify groupings of regional economies that are converging. Second, it neglects spatial effects that represent interregional interactions and spatial spillovers. The paper suggests a much richer and theoretically more satisfactory approach that is in line with both the notions of club convergence and spatial dependence, and reflects recent developments in spatial econometrics. The two-club spatial error convergence model with groupwise heteroskedasticity is found to be most appropriate for the data at hand. Two empirical key findings are worthwhile to note. The first is that the data provide much support for unconditional beta-convergence in Europe. The second is that the usual convergence conclusions hold. But they do so for reasons that are not revealed by the classical test equation that is typical in mainstream economics literature.

Keywords: European regions; income convergence; spatial econometrics (search for similar items in EconPapers)
JEL-codes: C21 O52 R11 R15 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Published in Annals of Regional Science 4.40(2006): pp. 693-721

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/77784/1/MPRA_paper_77784.pdf original version (application/pdf)

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:pra:mprapa:77784

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2019-12-18
Handle: RePEc:pra:mprapa:77784