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Markov or not Markov - this should be a question

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  • Bode, Eckhardt
  • Bickenbach, Frank

Abstract

Although it is well known that Markov process theory, frequently applied in the literature on income convergence, imposes some very restrictive assumptions upon the data generating process, these assumptions have generally been taken for granted so far. The present paper proposes, resp. recalls chi-square tests of the Markov property, of spatial independence, and of homogeneity across time and space to assess the reliability of estimated Markov transition matrices. As an illustration we show that the evolution of the income distribution across the 48 coterminous U.S. states from 1929 to 2000 clearly has not followed a Markov process.

Suggested Citation

  • Bode, Eckhardt & Bickenbach, Frank, 2002. "Markov or not Markov - this should be a question," ERSA conference papers ersa02p024, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa02p024
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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