Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19391
Authors: 
Badinger, Harald
Müller, Werner G.
Tondl, Gabriele
Year of Publication: 
2002
Series/Report no.: 
HWWA Discussion Paper 210
Abstract: 
We estimate the speed of income convergence for a sample of 196 European NUTS 2 regions over the period 1985-1999. So far there is no direct estimator available for dynamic panels with strong spatial dependencies. We propose a two-step procedure, which involves first spatial filtering of the variables to remove the spatial correlation, and application of standard GMM estimators for dynamic panels in a second step. Our results show that ignorance of the spatial correlation leads to potentially misleading results. Applying a system GMM estimator on the filtered variables, we obtain a speed of convergence of 6.9 per cent and a capital elasticity of 0.43.
Subjects: 
growth
convergence
spatial dependence
spatial filtering
dynamic panels
GMM
JEL: 
C23
R11
O00
Document Type: 
Working Paper

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