Abstract
The stochastic convergence amongst Mexican Federal entities is analyzed in panel data framework. The joint consideration of cross-section dependence and multiple structural breaks is required to ensure that the statistical inference is based on statistics with good statistical properties. Once these features are accounted for, evidence in favour of stochastic convergence is found. Since stochastic convergence is a necessary, but not sufficient, condition for convergence as predicted by economic growth models, the paper also investigates whether β-convergence process has taken place. We found that the Mexican states have followed either heterogeneous convergence patterns or divergence process throughout the analyzed period.
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Abbreviations
- ADF:
-
Augmented Dickey-Fuller
- BIC:
-
Bayesian information criterion
- GDP:
-
Gross domestic product
- iid:
-
Identically and independent distributed
- OECD:
-
Organisation for economic co-operation and development
- OLS:
-
Ordinary least squares
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The authors gratefully thank the comments and suggestions from one anonymous referee. We also acknowledge financial support from CICYT Project SEJ2005-08646/ECON (Josep Lluís Carrion-i-Silvestre) and Grant PROMEP/103.5/02/1168 of Secretaría de Educación Pública (SEP) and Universidad Autónoma de Coahuila (Vicente German-Soto).
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Carrion-i-Silvestre, J.L., German-Soto, V. Panel data stochastic convergence analysis of the Mexican regions. Empir Econ 37, 303–327 (2009). https://doi.org/10.1007/s00181-008-0234-x
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DOI: https://doi.org/10.1007/s00181-008-0234-x
Keywords
- Stochastic convergence
- β-Convergence
- Non-stationarity panel data tests
- Cross-section dependence
- Multiple structural breaks