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Identification and Estimation of Club Convergence Models with Spatial Dependence
Author(s) -
Bernadini Papalia Rosa,
Bertarelli Silvia
Publication year - 2013
Publication title -
international journal of urban and regional research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.456
H-Index - 114
eISSN - 1468-2427
pISSN - 0309-1317
DOI - 10.1111/j.1468-2427.2012.01170.x
Subject(s) - collinearity , club , convergence (economics) , econometrics , identification (biology) , estimation , inference , spatial heterogeneity , spatial dependence , computer science , mathematics , mathematical optimization , economics , statistics , artificial intelligence , geology , economic growth , ecology , botany , management , biology , paleontology
Abstract This article deals with heterogeneity and spatial dependence in economic growth analysis by developing a two‐stage strategy that identifies clubs by a mapping analysis and estimates a club convergence model with spatial dependence. Since estimation of this class of convergence models in the presence of regional heterogeneity poses both identification and collinearity problems, we develop an entropy‐based estimation procedure that simultaneously takes account of ill‐posed and ill‐conditioned inference problems. The two‐step strategy is applied to assess the existence of club convergence and to estimate a two‐club spatial convergence model across Italian regions over the period 1970 to 2000.