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A B ayesian space‐time approach to identifying and interpreting regional convergence clubs in E urope
Author(s) -
Fischer Manfred M.,
LeSage James P.
Publication year - 2015
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12104
Subject(s) - club , spillover effect , convergence (economics) , panel data , economics , econometrics , human capital , space (punctuation) , microeconomics , computer science , macroeconomics , economic growth , medicine , anatomy , operating system
This study suggests a two‐step approach to identifying and interpreting regional convergence clubs in E urope. The first step calculates B ayesian probabilities for various assignments of regions to two clubs using a general stochastic space‐time dynamic panel relationship between growth rates and initial levels of income as well as endowments of physical, knowledge and human capital. The second step uses the club assignments in a dynamic space‐time panel data model to assess long‐run dynamic direct and spillover responses of regional income levels to changes in initial period endowments for clubs that were identified. We find different dynamic partial derivative responses to endowments by regions in the two clubs that appear consistent with low‐ and high‐income regions as clubs.