B. Fingleton, SPECIFICATION AND TESTING OF MARKOV-CHAIN MODELS - AN APPLICATION TO CONVERGENCE IN THE EUROPEAN-UNION, Oxford bulletin of economics and statistics, 59(3), 1997, pp. 385
Citations number
47
Categorie Soggetti
Social Sciences, Mathematical Methods",Economics,"Mathematical, Methods, Social Sciences","Statistic & Probability","Statistic & Probability
Recently Markov chains have been used to analyze the convergence prope
rties of national and regional per capita incomes. This paper highligh
ts their applicability and importance for economists and illustrates s
ome of the potential pitfalls associated with this approach. The empir
ical conclusions, based on data for the period 1975 to 1993, are that
the regions of the EU appear to be converging to a form of equilibrium
characterized by stable proportions of economies at a range of output
per capita levels, and by a permanent chance of mobility between all
levels, consistent with the existence of multiple steady-states across
countries.