Assessing convergence across the European Union

Abstract

This paper assesses the convergence of 131 regions from 13 countries belonging to the European Union. The variable analysed is the log per capita GDP. For the assessment of this convergence we propose two steps: First, in the neoclassical context, the analysis of β and σ convergence. Second, in the time series framework, we analyse convergence based on the deviation of the regions’ GDP from the benchmark, in this case the mean of the group. The gist is to determine whether the deviation is stationary and, therefore, can be taken as an evidence of convergence. In order to test for stationarity, two tests are applied: the ADF and the KPSS tests. Moreover, we have analysed the European regions as a whole, as well as two groups that we consider relevant: the Mediterranean Arc and the Core European regions