Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103185
Authors: 
Fritsche, Ulrich
Kuzin, Vladimir
Year of Publication: 
2008
Series/Report no.: 
DEP (Socioeconomics) Discussion Papers, Macroeconomics and Finance Series 2/2008
Abstract: 
We investigate convergence in European price level, unit labor cost, income, and productivity data over the period of 1960-2006 using the non-linear time-varying coefficients factor model proposed by Phillips and Sul (2007). This approach is extremely flexible on order to model a large number of transition paths to convergence. We find regional clusters in consumer price level data. GDP deflator data and unit labor cost data are far less clustered than CPI data. Income per capita data indicate the existence of three convergence clubs without strong regional linkages; Italy and Germany are not converging to any of those clubs. Total factor productivity data indicate the existence of a small club including fast-growing countries and a club consisting of all other countries.
Subjects: 
Price level
Income
Productivity
Convergence
Factor Model
European Monetary Union
JEL: 
E31
O47
C32
C33
E37
Document Type: 
Working Paper

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