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Title:Regional convergence in the European Union (1985 - 1999) : a spatial dynamic panel analysis PDF Logo
Authors:Badinger, Harald
Müller, Werner G.
Tondl, Gabriele
Issue Date: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
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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