ERSA Summer school Groningen 2006

Convergence among regions of the enlarged Europe: impact of spatial

effects

Nicolas Debarsy Cem Ertur

General ideas

• My research topic consists in implementing theoretically spillovers effects in growth models, and thus using spatial econometrics as methodology

• Many studies over EU 15 NUTS-2 regions but barely one over enlarged EU

• This study shows importance of spatial effects in EU-25 NUTS-2 regions

General framework

• β-convergence framework– Absolute (unconditional) convergence

– Spatial regimes

20 with ~ (0, )Tg S y N I

General framework

• Clubs convergence (allow to take some spatial heterogeneity into account)

• Use of Getis statistics (local autocorrelation statistics) to define spatial regimes

Description of clubs

N

EW

S

EastWestOut of sample

Estimated equation

1 1 2 2 1 1 93 2 2 93

2~ (0, )Tg D D D y D y

N I

• D1,i=1 if region i belongs to club West

• D2,i=1 if region i belongs to club East

Empirics

• Period: 1993-2002 • 237 NUTS-2 regions• Creation of a weight matrix based on time

distance

Estimation of absolute convergence by SAR

Estimation Method ML QML

Dependent variable : gT σ² 0.0001 0.0001

LIK 790.19956 790.19956 AIC -1574.4 -1574.4 BIC -1560.7 -1560.7

0.043376 (0.000)

0.043376 (0.000)

-0.003971 (0.000)

-0.003971 (0.000)

0.720999 (0.000)

0.720999 (0.000)

Convergence speed 0.4% 0.4% Half-life 174 years 174 years

Notes: ML stands for maximum likelihood and QML for quasi maximum likelihood estimation. Numbers between brackets are the p-values, LIK is the value of the log-likelihood function, AIC is the Akaïke criterion and BIC the Schwartz criterion.

Estimation Method

ML

QML

² 0.0001 0.0001 LIK 778.80293 778.80293 AIC -1547.61 -1547.61 BIC -1530.4 -1530.4

West 0.10437 (0.000)

0.10437 (0.000)

East 0.00472 (0.794)

0.00472 (0.794)

West -0.00987 (0.000)

-0.00987 (0.000)

East 0.00139 (0.498)

0.00139 (0.498)

0.49599 (0.103)

0.49599 (0.103)

Convergence speed West 1.03% 1.03% East - -

Half-Life West 70 years 70 years East - -

Tests Individual stability test for

12.0116 (0.000)

12.0116 (0.000)

Individual stability test for

12.5275 (0.000)

12.5275 (0.000)

Global stability test 12.8896 (0.002)

12.8896 (0.002)

Notes: ML stands for maximum likelihood, QML for quasi maximum likelihood estimation. Numbers between brackets are the p-values

Future research and questions

• Develop a growth model including spatial effects

• work on panel data methods applied to spatial econometrics (Matlab routines)

• How to take outliers effet into account in a frequentist approach?

• Bayesian econometrics ?