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Testing for convergence clubs in income per-capita: A predictive density approach

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  • Canova, Fabio

Abstract

The paper proposes a technique to jointly tests for groupings of unknown size in the cross sectional dimension of a panel and estimates the parameters of each group, and applies it to identifying convergence clubs in income per-capita. The approach uses the predictive density of the data, conditional on the parameters of the model. The steady state distribution of European regional data clusters around four poles of attraction with different economic features. The distribution of income per-capita of OECD countries has two poles of attraction and each group has clearly identifiable economics characteristics.

Suggested Citation

  • Canova, Fabio, 2001. "Testing for convergence clubs in income per-capita: A predictive density approach," HWWA Discussion Papers 139, Hamburg Institute of International Economics (HWWA).
    • Handle: RePEc:zbw:hwwadp:26361
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    More about this item

    Keywords

    Heterogeneities; Panel Data; Predictive Density; Income Inequality;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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