The heterogeneity of convergence in transition countries

Abstract

ABSTRACT:For two groups of post-communist countries (CEE and CIS) we estimated the parameters of convergence equations on the basis of annual data. We depart from standard econometric theory, which involves panel regression techniques. We test cross-country heterogeneity of parameters within a system of Seemingly Unrelated Regression Equations (SURE). We show empirical evidence in favour of the variability of parameters describing the convergence effect and productivity growth rates across countries. Our approach seems a convincing alternative to the panel regression approach where random effects can be estimated, imposing an assumption about the constancy of structural parameters within the group of countries under analysis.We discuss the role of the global financial crisis in the heterogeneity of convergence processes and productivity at the country level. The aforementioned SURE model was estimated based on two datasets, one containing observations prior to the crisis and the second containing the whole sample.

Investigating the Heterogeneity of Economic Convergence in Latin America Countries – An Econometric Analysis of Systems of Regression Equations

“…To start, just like in the paper by Pipień and Roszkowska (2018), we refer to the standard regression form of the conditional convergence equation for a particular country for observed values in time points t=1,…,T:…”

“…In this paper, following Pipień and Roszkowska (2018), the vector of explanatory variables consists of investment rates, government expenditure in relation to GDP, the inflation rate, and trend as a proxy for institutional or technological changes. Sala-i- Martin (1997) presented a comprehensive study determining empirical importance of factors explaining variability of the Latin american economic review (2020) 29:6 7/17 per capita output growth rates among countries all over the world.…”

“…Zellner (1962). The idea was previously applied by Pipień and Roszkowska (2018) for convergence analysis of countries from the Commonwealth of Independent States (CIS) and Central & Eastern Europe (CEE) and also by Olszak and Pipień (2016) to the problem of procyclicality of the financial system. The methodology departs from commonly adopted regression analysis and enables detailed insight into heterogeneity of the speed of convergence and other effects among countries.…”

Diversity in returns to education in Europe. The empirical importance of the systems of the regression approach

“…The variability of parameters describing the impact of years of schooling to the wages, results from the application of the system of Seemingly Unrelated Regression Equations (SURE). Recently this classic yet very promising approach to modelling heterogeneity has received particular attention in cases of convergence analysis or the relationship between credit and growth; see Pipień and Roszkowska (2018) and Olszak and Pipień (2016), respectively.…”

Income Convergence in Presence of Liberalization Measures, Governance and Technology Adoption

“…As pointed out by (Barrios, Flores, & Martínez, 2019;Iqbal, 2006) various regional groups like European Union, NAFTA, ASEAN dealt with state-driven integration policies in alluring challenges of international dealings (Vujović, 2019;Zhao & Serieux, 2019). Similarly the concept has been currently studied in various groups / clubs in world economies (Barrios et al, 2019;Cabral & Castellanos-Sosa, 2019;Díaz Dapena, Rubiera-Morollon, & Paredes, 2019;Palma & Reis, 2019;Pipień & Roszkowska, 2019) showing the importance of economic integration.…”