Abstract
Assessing regional growth and convergence across Europe is a matter of primary relevance. Empirical models that do not account for structural heterogeneities and spatial effects may face serious misspecification problems. In this work, a mixture regression approach is applied to the β-convergence model, in order to produce an endogenous selection of regional growth patterns. A priori choices, such as North–South or centre-periphery divisions, are avoided. In addition to this, we deal with the spatial dependence existing in the data, applying a local filter to the data. The results indicate that spatial effects matter, and either absolute, conditional, or club convergence, if extended to the whole sample, might be restrictive assumptions. Excluding a small number of regions that behave as outliers, only a few regions show an appreciable rate of convergence. The majority of data show slow convergence, or no convergence at all. Furthermore, a dualistic phenomenon seems to be present inside some States, reinforcing the “diverging-convergence” paradox.
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A previous version of the paper was presented at the International Workshop on Spatial Econometrics and Statistics, May 25–27, 2006, Rome, Italy. We wish to thank all the participants for their useful comments. Our acknowledgements to Rolf Turner and two anonymous referees for technical advice.
An erratum to this article can be found at http://dx.doi.org/10.1007/s00181-007-0169-7
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Battisti, M., De Vaio, G. A spatially filtered mixture of β-convergence regressions for EU regions, 1980–2002. Empirical Economics 34, 105–121 (2008). https://doi.org/10.1007/s00181-007-0168-8
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DOI: https://doi.org/10.1007/s00181-007-0168-8