Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80489
Authors: 
Borsi, Mihály Tamás
Metiu, Norbert
Year of Publication: 
2013
Series/Report no.: 
Discussion Paper, Deutsche Bundesbank 28/2013
Abstract: 
This paper investigates economic convergence in real income per capita between 27 European Union countries. We employ a non-linear latent factor framework to study transitional behavior among economies between 1970 and 2010. Our results offer important insights on the economic catch-up exhibited by the new EU members in light of the institutional changes and macroeconomic adjustment processes undertaken over the last 40 years. Our main findings suggest no overall real income per capita convergence in the EU, however, we identify subgroups that converge to different steady states using an iterative testing procedure. Regional linkages play a significant role in determining the formation of convergence clubs. The empirical evidence suggests a clear separation between the new and old EU member states in the long run.
Subjects: 
Club convergence
Dynamic factor model
Economic integration
Growth
New member states
JEL: 
C33
O47
ISBN: 
978-386-55894-2-2
Document Type: 
Working Paper

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