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Overall US and Census Region β-Convergence 1963–2015 Controlling for Spatial Effects

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Abstract

Economic growth and β-convergence of American states 1963–2015 is analyzed adjusting for significant spatial autocorrelation with system-GMM by considering the four Census macro regions individually. The Census regions converged over the last 50 years with both physical and human capital contributing to growth. In an early era (1963–1983), convergence was higher with rates varying between 4.7 and 1.5%, while for a later era (1984–2015) the rate was below 1% which is below the standard of 2% but fits well with a neoclassical growth paradigm. The Midwest region had the highest rate of convergence in the early era but then had almost no convergence in the later era with the other three regions having very low but positive convergence. Unlike many earlier studies, human as well as physical capital accumulation empirically supports economic growth as theory predicts.

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Notes

  1. The estimates were run with attention to using similar instruments and orthogonal deviations to do comparable both unfiltered and filtered regressions. The main changes are observed in the rate of convergence and the elasticities between income and its factors (human and physical capital). The filtered values offer a better adjustment according to the theory. Also, the assumption of normality is at times not satisfied and some unfiltered regressions suffer from weak instruments. Some coefficients of the factors are even negative with unfiltered regressions contrary to theory. The authors can provide the unfiltered results upon request.

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Acknowledgements

We thank two anonymous referees for detailed comments that great improved the paper and assistance from the editor.

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Authors and Affiliations

  1. Faculty of Economics, Unidad Camporredondo, Autonomous University of Coahuila, Edificio “E”, s/n, entre las calles Av. De los Maestros y David Berlanga, C.P. 25000, Saltillo, México

    Vicente German-Soto

  2. Department of Economics, Parker College of Business, Georgia Southern University, P.O. Box 8153, Statesboro, GA, 30460-8153, USA

    Gregory Brock

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  1. Vicente German-Soto
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German-Soto, V., Brock, G. Overall US and Census Region β-Convergence 1963–2015 Controlling for Spatial Effects. Comp Econ Stud 64, 44–67 (2022). https://doi.org/10.1057/s41294-021-00159-y

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