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Convergence: A Spatial Dynamic Panel Data Approach

Author

Listed:
  • JIHAI YU

    (Guanghua School of Management, Peking University, P. R. China)

  • LUNG-FEI LEE

    (Department of Economics, Ohio State University, USA)

Abstract

A spatial dynamic panel data approach is adopted to study regional growth convergence in the US economy. In the neoclassical growth model, regions and countries are assumed to be independent from each other, which may not be valid in the real world. We introduce technological spillovers into the neoclassical framework, showing that the convergence rate is higher and there is spatial interaction. By examing annual data on personal state income spanning the period of 1930–2006 for the 48 contiguous states, we obtain empirical results that are consistent with the theoretical prediction.

Suggested Citation

  • Jihai Yu & Lung-Fei Lee, 2012. "Convergence: A Spatial Dynamic Panel Data Approach," Global Journal of Economics (GJE), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-36.
    • Handle: RePEc:wsi:gjexxx:v:01:y:2012:i:01:n:s2251361212500061
    DOI: 10.1142/S2251361212500061
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    References listed on IDEAS

    as
    1. Badi H. Baltagi & Peter Egger & Michael Pfaffermayr, 2013. "A Generalized Spatial Panel Data Model with Random Effects," Econometric Reviews, Taylor & Francis Journals, vol. 32(5-6), pages 650-685, August.
    2. Su, Liangjun & Yang, Zhenlin, 2015. "QML estimation of dynamic panel data models with spatial errors," Journal of Econometrics, Elsevier, vol. 185(1), pages 230-258.
    3. Mutl, Jan & Pfaffermayr, Michael, 2008. "The Spatial Random Effects and the Spatial Fixed Effects Model. The Hausman Test in a Cliff and Ord Panel Model," Economics Series 229, Institute for Advanced Studies.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Convergence; dynamic panels; fixed effects; spatial effect; O33; O47; O51;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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