Income convergence within the MENA countries: A panel unit root approach

Guetat, Imène; Serranito, Francisco

doi:10.1016/j.qref.2006.08.012

Cited by 45 publications

(24 citation statements)

References 16 publications

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“…Evans and Karras (1996), Evans (1998), Kutan and Yigit (2005), Guetat and Serranito (2007), and Lopez and Papell (2012). Given the differences in economic structure and development between our sample countries, we employ two panel unit root tests which are suitable for the analysis of dynamic heterogeneous panels.…”

Section: Panel Unit Root Testsmentioning

confidence: 99%

“…1 Mankiw et al, 1992) and time series tests of unit root and cointegration (e.g., Evans and Karras, 1996;Evans, 1998;Siklos, 2010;Kutan and Yigit, 2005;Guetat and Serranito, 2007;Lopez and Papell, 2012). For an overview of the empirical techniques and their potential drawbacks, see Bernard and Durlauf (1996), Binder and Pesaran (1999), and Islam (2003).…”

Section: Introductionmentioning

confidence: 99%

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The evolution of economic convergence in the European Union

2014

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Reproduction permitted only if source is stated.ISBN 978-3-86558-941-5 (Printversion) Non-technical summary Western European countries took major steps toward economic integration in recent decades, including the liberalization of capital and labor markets and the foundation of the European Economic and Monetary Union (EMU). The 1992 Maastricht Treaty set an agenda for macroeconomic convergence prior to entering the monetary union, and the European Commission has put forward numerous policy initiatives aimed at the reduction of regional economic disparities and improving competitiveness among EU members. Meanwhile, in Central and Eastern European countries (CEEC) important political and institutional changes were undertaken in the 1990s. These involved sizable macroeconomic adjustment processes, e.g., transition from planned to market economy, liberalization of prices, and privatization of state assets.Starting from the hypothesis that closer economic integration between countries may lead to increased real income per capita convergence, this paper investigates convergence in real incomes per person between the 27 current member states of the EU for the time horizon 1970-2010. We employ an empirical convergence test derived from a neoclassical growth model augmented with endogenous technological progress which differs across countries and over time. The model implies that the transition path of each economy toward the steady state level of per capita real income depends on country-specific technological growth rates. This approach enables us to study various types of economic transition behavior, e.g., temporary divergence followed by catching-up and convergence. In addition, the convergence test is applied in an iterative manner in order to identify convergent country groups, or so-called 'convergence clubs'.Our results offer important insights on the economic catch-up exhibited by the new EU members in light of the institutional changes and macroeconomic adjustment processes experienced in recent decades. The main results can be summarized as follows. We do not find overall real income per capita convergence in the EU. This result is robust to any time horizon considered. Instead, we discover country groups that converge to different income levels in the long-run. Regional linkages seem to play a significant role in determining the formation of convergence clubs. Yet, eurozone countries belong to distinct subgroups, thus clustering is not necessarily related to EMU membership. Moreover, there is a clear separation between the CEEC and the old EU members in the long run, suggesting that, even though the CEEC have exhibited higher real income growth than the EU average over the last 40 years, catching up was not sufficient in order to eliminate cross-country real income per capita differences. Finally, we observe a South-East vs. North-West division of European economies by the mid-nineties.Our results draw attention to the lack of growth-enhancing structural reforms in EU countries, posing a threat to the achi...

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Section: Panel Unit Root Testsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The evolution of economic convergence in the European Union

2014

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“…Our results show that, in line with earlier contributions to the literature, bilateral factors such as trade volumes and the source country's share of world market capitalization play a significant their plan to enter a monetary union by 2010 and issue a common currency goes smoothly. Bley and Chen (2006), Guetat and Serranito (2007), and Alkulaib et al (2008) have already associated the strong economic growth of the GCC countries to the ongoing economic and financial integration of the region with the rest of the world. role in portfolio allocation to the GCC region.…”

Section: Introductionmentioning

confidence: 99%

The patterns of cross-border portfolio investments in the GCC region: do institutional quality and the number of expatriates play a role?

2009

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In this paper, we document the determinants of portfolio investments to Gulf Cooperation Council (GCC) economies by bringing up the role played by market forces, cultural affinities, and institutional quality. We classify the GCC economies as host to 35 countries as per the Coordinated Portfolio Investment Surveys (CPIS) of the IMF for the period [2001][2002][2003][2004][2005][2006]. Using the CPIS data and data from various other reliable sources and appropriate panel data analysis techniques, we find a number of interesting results: 1) the relatively higher quality of institutional set up in GCC in comparison to other countries; 2) the relative volume of expatriates across source countries in GCC soil; and 3) bilateral factors such as trade linkages between GCC and source countries, all statistically and significantly explain portfolio investments to the GCC region. Additionally, we uncover the existence of a portfolio "GCC bias". That is, GCC investors exhibit a strong preference towards their own markets when allocating their cross border financial asset holdings.JEL classification: E44, F15, F36, F41

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“…Some other advanced works, by using the first-generation panel unit root tests such as Maddala andWu (1999, hereafter MW), Levin et al (2002, LLC), and Im et al (2003, IPS) to increase statistical power, include Evans andKarras (1996), Fleissig andStrauss (2001), and Guetat and Serranito (2007), and so on. 5 While the messages from the studies using univariate unit root or cointegration techniques are mixed, the conclusions drawn from the line of research based on panel unit root tests usually support the hypothesis of stochastic convergence in per capita income.…”

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confidence: 99%

Convergence in income inequality? evidence from panel unit root tests with structural breaks

Lin

Huang

2011

Empir Econ

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This paper empirically tests whether there is evidence of convergence in income inequality, as predicted by several versions of the neoclassical growth model, using a large panel of annual data for the 48 contiguous states in the US over the 1916-2005 period. By implementing the panel LM unit root test developed by Im et al. (Oxford Bull Econ Stat 67:393-419, 2005, Panel LM unit-root tests with trend shifts, Mimeo, 2010) that allows for the presence of structural breaks and heterogeneity in the panel, we find overwhelming evidence in support of convergence in income inequality. In addition, the results are robust to alternative inequality indicators used, different notions of stochastic convergence defined, and additional cross-sectional correlation considered.

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Income convergence within the MENA countries: A panel unit root approach

Cited by 45 publications

References 16 publications

The evolution of economic convergence in the European Union

The evolution of economic convergence in the European Union

The patterns of cross-border portfolio investments in the GCC region: do institutional quality and the number of expatriates play a role?

Convergence in income inequality? evidence from panel unit root tests with structural breaks

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