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The positive link between good institutions and economic development is well documented in the literature on the deep determinants of economic growth. Consequently, convergence in institutional quality should be a necessary precondition for income convergence; however, only recently, researchers started to investigate empirically the nature of institutional development. This topic seems to be of particular relevance for the European Union (EU) since convergence in institutions and in per capita income across the EU Member States are key goals of the European integrations process. Especially in the course of the various EU enlargement waves starting in 2004, it was intensively discussed whether institutional and structural homogeneity are necessary preconditions for real convergence and the smooth functioning of the EU or whether a (further) catching up in the institutional and economic development will endogenously occur after the EU accession. Our paper is dedicated to the analysis of these institutional dynamics within the EU. In particular, we analyze the formation of institutional convergence clusters using Phillips and Sul’s (2007, 2009) log t test over the period 2002 to 2018. It is the first study that takes into account the possibility of multiple equilibria when analyzing the institutional catching-up process within the EU, whereas previous contributions focused on the empirical concepts of beta- and sigma-convergence. Our results indicate the existence of multiple institutional clubs (for the dimensions government effectiveness, regulatory quality, rule of law, and control of corruption of the Worldwide Governance Indicators) with various countries being stuck in a poor institutional trap. Moreover, we find that institutional convergence clubs are formed mainly on the basis of geographic region. Northern and Western European countries are typically in the higher institutional clubs whereas the lower institutional clubs comprise primarily Eastern and Southern European countries. When analyzing per capita income clubs, a rather similar picture emerges, suggesting that the underlying institutional clusters determine the formation of income clubs. Among the countries that joined the EU after 2004, Estonia, Lithuania, and Latvia perform best with respect to their institutional catching-up, whereas most of the remaining new member countries are found to be stuck in poor institutional traps. The situation is particularly severe for Slovakia, Slovenia, Bulgaria, Croatia, and Hungary. We also study the factors that determine club membership by using an ordered probit model. Most importantly, we find that the initial levels of human capital and institutional quality are decisive for determining whether a country is on a high or low institutional growth path.

This article discusses the influence of integration policies on tourism industry convergence in the Yangtze River Delta based on data from 2011 to 2018. The spatial econometric test indicates that tourism industry development had a positive spatial spillover effect and a strong self-reinforcing effect. The tourism industry demonstrated significant characteristics of $$\beta$$ convergence and club convergence. The nonlinear time-varying factor model logt test shows that Shanghai and some important tourism cities were in high level convergence clubs, whereas most cities of Anhui Province were in the bottom of the club. The influence mechanism test based on the intermediary effect shows that the integration policies issued by the Yangtze River Delta City Economic Coordination Conference and the Yangtze River Delta Tourism Cooperation Joint Meeting could promote the tourism industry convergence by improving government administrative efficiency, optimizing public resource redistribution, and increasing market potential. The effect of the policies depended on the size of city.

Economic liberalization has been the emphasis of adjustment policies in developing countries; ASEAN countries jumped on the bandwagon and espoused economic reforms by liberalizing its international trade and financial policies. Through the development of free trade agreement policies such as AEC and RCEP, regional economic integration is accelerating in South East Asia; not leaving behind the less developed member countries such as Cambodia, Lao PDR, Myanmar and Vietnam (CLMV). Hence, the objectives of this paper are to examine the dynamic impact of economic liberalization (financial and trade liberalization) on ASEAN’s economic growth and to assess the possibility of the existence of convergence club between ASEAN and its RCEP counterparts. Using the annual data covering the period of 1994 to 2014, the analysis is based on the Pooled Mean Group (PMG) estimations for liberalization analysis while the Phillips and Sul (2007) methodology is used to assess the economic convergence clubs. The empirical evidence suggests that both trade and financial liberalization play a significant role in ASEAN’s economic growth. For convergence in RCEP, full sample find an absence of homogenous convergence; as a result, four club convergences are formed. The result highlights the importance of trade and financial liberalization in enhancing economic growth of ASEAN and implies that strong commitments in continuation of liberalization and integration policies are recommended to promote a sustained economic growth.

This paper analyzes the long-run convergence of regional house prices in a major developing country, Turkey. Using a non-linear time-varying factor model and quarterly hedonic house price data from 2010 to 2018, we find that house prices do not converge across 26 regions of Turkey. Results reveal that the regions can be grouped into seven convergence clubs and one divergent club, confirming the Turkish housing market’s heterogeneity and complexity. We extend the analysis to explore the possible factors driving the convergence clubs. We find that income, population, education, unemployment, being in an earthquake zone, and inflow of Syrian refugees are significant driving forces in explaining convergence club formation. These outcomes will benefit home buyers/sellers, investors, regulators, and policymakers interested in analyzing the dynamic interlinkages among house prices and the effects of shocks originating from the regional housing markets in developing countries.

The last quarter of the 20th century was a period of sustained economic growth across many countries. Countries’ institutional arrangements have been commonly employed as factors in the convergence studies of economic growth and income levels. However, the issue of whether institutions themselves converge has been under-researched. Using the nonparametric distribution dynamics approach and a sample of 194 countries during the 1980-2010 period, we examine a tendency for countries’ informational transparency (IT) to converge over time. We find that whilst there is some evidence of unconditional convergence across countries, there is stronger evidence for convergence clubs to emerge, at both regional and income levels. Notably, the level of IT of the low- and lower-middle-income countries and those situated in Africa, and Middle East regions tend to converge towards a level significantly below the global average. We also find a strong relationship between income and IT., Varios países presentaron un crecimiento sostenido en los últimos 25 años del siglo recién pasado. Aunque los arreglos institucionales han sido comúnmente utilizados como factores para explicar la convergencia en crecimiento y niveles de ingreso, el estudio de si las instituciones convergen no ha sido suficientemente estudiado. Utilizando el enfoque de dinámica de distribuciones no paramétricas y una muestral de 194 países en el periodo 1980-2010, este trabajo examina si existe la tendencia de la transparencia en la información (IT) a converger en el tiempo. Se encuentra que, aunque hay cierta evidencia de convergencia incondicional, también la hay de clubes de convergencia a nivel regional y de ingresos. El nivel de IT de países de ingresos bajos y medios y de aquellos situados en África y el Oriente Medio tienden a converger a niveles significativamente menores que el promedio global. También encontramos una relación estrecha entre IT e ingreso.

This study re-examines the international convergence in defence spending for 125 countries spanning 1985–2018. We employ the approach of Phillips and Sul, which tests for the existence of convergence clubs and the modelling of different transition paths to convergence. Our findings suggest no overall defence spending convergence at the world, income groups (except the low-income countries) and regional levels. However, we identify two convergence clubs using an iterative testing procedure and eventually (i) at world level, these two clubs exhibit convergence, and (ii) while taking into account Gross national income, geography and defence alliances/economic cooperation it is possible to make different number of convergence/divergence clubs. Contrary to previous findings, this study finds that the process of convergence in defence spending does not reflect the desirable emanations of defence policies sharing similar characteristics, at least in terms of the allocation of scarce public resources across the globe.

An extant empirical literature produces evidence on economic convergence using methods that assume an underlying deterministic trend. Competing approaches that assume a stochastic trend, however, produce only limited evidence of economic convergence. In this paper we address this puzzling feature of the literature by providing a comprehensive analysis of economic convergence using three methodologies that cover all possible underlying assumptions: deterministic, stochastic, and combination trends. We also develop a method for an overall Stochastic Convergence Rate Index, that combines the outcomes of alternative stochastic tests and provides a single measure of the intensity of stochastic convergence. We consider 135 economies over the period 1980–2017. We find that economic convergence occurs at a global level through the formation of convergence clubs, and economic convergence emerges as a deterministic rather than a stochastic process. Tests that ignore deterministic trends tend to understate the evidence for convergence.

This paper finds club convergence within the 50 U.S. states using the Phillips and Sul regression-based convergence test with per capita real state domestic product from 1997 to 2017. Two clubs wit...

This study explores the impact of neighbor regions on the club convergence for Turkey. Markov chain analyses are augmented by using the spatial lag conditioning. The central hypothesis is that, having a rich (poor) spatial proximity increases the chances to move towards higher (lower) income classes. Our preliminary evidence covers the 1975–2017 period and points out that Turkish regions are not converging on average rather converging to varying income levels. This signals the formation of convergence clubs. Our augmented analyses highlight that the club convergence process is influenced from the income level of neighbor regions. Those regions whose neighbors belong to high income classes have higher chances to move to higher income classes, whereas the peripheral regions linked with the poor ones are getting more isolated. Our results highlight that regional policy framework and local economic activity has an influence beyond the administrative boundaries of regions. This calls for spatially flexible and smart local policies to combat with regional disparities.

This paper investigates the existence of club convergence on the NUTS (Nomenclaturedes Unites Territoriales Statistiques) 3 level in Serbia. While a common approach in investigating convergence is ...

This paper empirically analyzes the convergence and interdependence of environmental taxes in EU-28 from 1998 to 2018. Our results evidence a lack of European integration and reveal a group of converging countries characterized by a lowering tax burden. Moreover, a subsequent spatial regression analysis supports that the converging countries exhibit a significantly greater sensibility to the neighbouring environmental tax policies, compatible with some degree of cross-country tax competition, Este artículo analiza la convergencia e interdependencia de los impuestos ambientales en EU-28 desde 1998 hasta 2018. Nuestros resultados evidencian una falta de integración europea y revelan la presencia de un grupo de países convergentes caracterizados por una carga tributaria decreciente. Además, un análisis de regresión espacial posterior sugiere que los países convergentes muestran una sensibilidad significativamente mayor hacia las políticas fiscales ambientales vecinas, lo cual sería compatible con cierto grado de competencia fiscal interestatal

This paper studies the distribution dynamics of China's household consumption upgrading by using household survey data. The findings show that the consumption upgrading index is between 0.75 and 0.95 for most of the households. The convergence value of the rural households is much higher than their urban counterparts, and the rural-urban gap can be reduced in the future. However, urban poverty may exacerbate as our findings show that the urban households with consumption upgrading index around 0.63 would experience consumption downgrade. Turning to regional disparity, the western region in China would converge to the highest level of consumption upgrading index amongst the four regions, while the northeastern region would converge to the lowest level. The study suggests that consumption upgrading and development policy should pay attention to regional disparity, rural development, and urban poor, and the measures should be group specific.

Against a background of financial liberalisation reforms, we assess the extent of market integration and competition in Colombian retail deposits and loans markets. We employ a dataset comprising bank-level interest rate data for different financial products across a range of banks. We utilise and further develop the Phillips and Sul convergence club approach by estimating the drivers of club formation. We find integration of the deposits market, but not loans where portfolio riskiness and loan maturity explain why there is not a fully integrated market. Also, the degree of loan market convergence responds asymmetrically to changes in monetary policy. © 2019 Elsevier Inc.

Improving carbon emission performance is widely regarded as one of the most cost-effective ways to combat clime change. This paper employs a parametric Malmquist index approach to measure total factor carbon productivity in 88 economies over the period of 1975–2013. Then, we explore the trend of carbon productivity with the log t regression test and identify potential convergent clubs. Furthermore, the Ordered Probit model is employed to examine the factors affecting the club convergence of carbon productivity growth. The main findings are as follows: (1) the carbon productivity on average increased by 63.5% during the sample period, mainly driven by technological progress; (2) the developed countries performed better than the developing countries. Meanwhile, the developed economies were far ahead in terms of technological progress, while the developing ones have performed slightly better in terms of carbon efficiency improvement; (3) although the whole sample did not show convergent trend, five convergence clubs formed with significant differences in carbon productivity growth; (4) the economies with higher GDP per capita and R&D investment tended to converge to the club with a higher carbon productivity, while the economies with higher energy intensity and foreign trade dependence tended to converge to the club with a lower carbon productivity. Finally, we draw some important policy implications.

We investigate the extent of convergence club formation in local house prices. Our study is novel in a number of key ways. First, new insights are obtained through utilising a large disaggregated panel dataset comprising multiple types of housing (detached, semi-detached, terraced housing and flats) for a very large sample of 348 England and Wales local authorities. Second, we analyse through probit estimation those factors that drive convergence club formation. Third, we also consider within-city club formation as well as club formation during periods of house price bubbles. Using a study period of more than two decades, we find the presence of divergence or multiple house price convergence clubs rather than a single club. While location, distance, income, population density, congestion and education are significant in explaining convergence club formation, housing type is also an important factor with convergence less likely among detached, semi-detached and terraced housing than among flats. © 2018 Elsevier Inc.

This paper investigates the formation of convergence clubs and examines the drivers of growth convergence in Africa by accounting for individual heterogenous effects and establishing transitional paths. We particularly employ the sophisticated log t test to identify underlying convergence clubs and use LSDVC as a benchmark model for analysing the drivers of convergence. We also apply the System Generalized method of moments (GMM) model for sensitivity purposes. Our results reveal four core convergence clubs; seemingly characterised by the measures of institutional stability with distinct transitional paths. We consequently highlight the importance of initial conditions, human capital and institutions in the formation of convergence clubs. Thus, the paper provides insights into the adoption of differentiated development policies consistent with the specific conditions of African countries with the integration agenda driven by accelerated levels of human capital development and technological progress.

The aim of this paper is to test for overall and cluster convergence of housing rents across Polish provincial capitals and to identify drivers of convergence club formation. In order to achieve the goal of the study, several novel convergence tests were used, including the Kong et al. (J Econom 209:185–207, 2019. https://doi.org/10.1016/j.jeconom.2018.12.022) and Phillips and Sul (Econometrica 75:1771–1855, 2007. https://doi.org/10.1111/j.1468-0262.2007.00811.x) approaches. Moreover, club convergence analysis was carried out in four different configurations, varying in the technique of trend component extraction from the data. In particular, three well-known methods of time series decomposition were used, i.e. the Hodrick–Prescott, Butterworth and Christiano–Fitzgerald filters, as well as the most recent boosted Hodrick–Prescott filter. The results indicated that rental prices across the studied cities do not share a common path in the long run. It is possible, however, to identify convergence clubs where rents are moving towards a club-specific steady state. Detailed analysis of the structure of estimated clusters showed that data filtering using the boosted Hodrick–Prescott method leads to the most reliable allocation of cities to convergence clubs. Moreover, the estimation of logit models revealed that the likelihood of any two cities belonging to the same convergence club depends mainly on similar levels in terms of the unemployment rate, housing stock, city area, and the number of students. Finally, recommendations for local and national policy-makers concerning the development of the rental market have been formulated, particularly in the areas of urban land-use planning policy, housing legislation and public–private partnerships.

We analyse real income convergence among the EU28 countries throughout 1995–2017 and the relationship with the convergence patterns of financial systems. We apply the nonlinear latent factor model of Phillips and Sul (2007, 2009) to real incomes and the IMF financial development indices for financial markets and financial institutions (Svirydzenka, 2016), and identify convergence clubs endogenously. We have several results. First, income disparities narrowed significantly over the last twenty years; yet, the growth convergence process lost momentum triggered by the global financial crisis and countries legacies shaped up asymmetries that have crystallised. Second, countries' financial systems exhibit high fragmentation, especially for financial markets, with the new EU member states at a lower financial development, confirming the existence of a two-tier Europe. Overall, the convergence patterns for real incomes and financial development are strongly correlated. Finally, the financial structure matters and market-oriented economies feature higher long-run growth, indicating the need to implement pan-European policy actions that increase the opportunities of risk diversification, enhance capital raising and channel large-scale financing to firms.

There has been a general consensus that greenhouse gas emission is closely related with energy consumption. A systematic and complete investigation of the state and evolution of the energy consumption structure (ECS) of global countries is of great importance to figure out the different positions, responsibilities and missions of each country in the global climate change cooperation. Furthermore, such task is of great policy implications to generate a global reference system for different countries, guiding each one to improve, update and optimize its ECS. However, most existing studies regarding the world ECS neglects the evolutionary trends of ECS and their distributional positions in the global picture. Noting the paucity of studies of convergence in ECS across the world countries, this paper aims to explore the evolution of ECS at the national level and the global level to sharpen understandings on the state of global energy transition by employing the distribution dynamics approach. Three major energy sources were investigated, including coal, oil, and natural gas. The dataset was collected from the Global Trade Analysis Project database whose latest version covers the period from 2004 to 2014. In the second part of the analysis, the dataset is further divided into different income groups so as to evaluate the impacts of income on the distribution dynamics. A distribution dynamics approach is used to analyze the data of almost all the countries and regions in the world. The visualization of global ECS provides an insightful and novel understanding on the underlying trends. This study fills an important gap in the literature by providing several important findings which are not available from traditional econometric techniques. First, many countries would reduce their relative coal and oil consumption in the future but oil would remain to be the most common form of energy source. However, great variability can be observed for the distribution of gas consumption. Second, from the ergodic distribution of the gas market, it can be observed convergence clubs may emerge in the long run as the countries would congregate in certain clusters with similar levels of gas consumption. These findings call for further research and policy planning for the development of gas industry. Third, the distribution dynamics is very different for the four income groups (according to the World Bank), and so it is necessary to take a country's income level into consideration in formulating energy policies. Fourth, our findings reflect the issue of global inequality amongst the countries as the energy consumption of the poor countries are much lower than the other countries. Fifth, oil is deemed to be the most popular form of energy sources for the upper-middle-income and high-income countries, while coal is not a preferred energy source for the affluent countries, thereby suggesting the need to provide aid to the poor countries for mitigating the use of coal. Finally, gas consumption seems to have a very high variability and the countries can have very different consumption patterns of gas even if they belong to the same income category, implying that country-specific policies should be formulated for the development of the gas industry. Furthermore, it is observed that for the lower-middle-income and upper-middle-income countries, the big consumers of gas tend to increase their gas consumption further. The findings derived from this study may prove valuable for the policy makers in formulating energy policies for adapting to market changes, and may assist the design of international aid program on mitigating carbon emissions for the poor countries.

In this paper, an empirical analysis is proposed by employing a regression-based convergence test, which was first introduced by Phillips and Sul. Unlike most related studies, this approach allows examining for evidence of club convergence and enables to endogenously identify groups of counties that converge to different equilibria. The results obtained in this paper support the existence of convergence clubs, indicating that 108 counties of Henan Province in China form four separate groups within which income per capita dispersion is decreasing over time. Moreover, results from an ordered logit model suggest that differences in initial income, physical capital, government intervention, geographical agglomeration, and topography factor among these counties have played vital roles in determining club membership. The most important conclusion of this paper is that the structural characteristics and infrastructure level do not contribute to determining club membership, and neighbors’ effect is also not a decisive factor. Particularly, counties which belong to Central Henan Urban Agglomeration are more likely to fall into a club with a higher mean income per capita. The findings in this paper may have significant policy implications for developing regions.

This paper analyzes fiscal convergence and sustainability in the European Union using data on government debt, revenues, and expenditures. Absolute fiscal divergence is present in the EU, especially after the sovereign debt crisis. However, we find evidence of fiscal club convergence when clubs are endogenously determined. Club convergence is important for the EU because there is no single fiscal policy and member states’ policies are heterogeneous. Endogenous clubs do not share the usual geographical, political, or development similarities. Fiscal policy in the EU is found to be unsustainable, but it is countercyclical. We use a policy response function where the primary surplus is a function of public debt and the output gap. The primary surplus does not respond to changes in public debt, and this is considered to be unsustainable. However, it increases in expansions and decreases in recessions thus being countercyclical. The countercyclical primary surplus is important for smoothing business cycles.

We examine convergence in per capita energy consumption across nine sectors and seven states and territories in Australia over the period 1990–2016 using the Phillips-Sul club convergence approach. We find evidence of multiple convergence clubs for aggregate energy consumption per capita and for energy consumption per capita in eight of the nine sectors with full club convergence in the case of electricity. The presence of multiple equilibria for most sectors reflect that states with similar features in terms of climate, economic activities and population size, among others, tend to exhibit similar energy consumption patterns. Our results highlight the need to tailor policies designed to reduce energy consumption in specific sectors to the consumption convergence paths unique to particular clusters of states.

In this paper we examine whether there is a convergence among residential water price rates for thirty major U.S. cities over the period 2010–2017. By utilizing the methodological framework by Phillips and Sul (Econometrica 75:1771–1855, 2007, J Appl Econom 32:1039–1042, 2009) we test for the existence of convergence clubs among cities’ water pricing policies. We identify the existence of convergence clubs which are based on different consumption markets. The estimated transition paths reveal a tendency of policy makers to increase water price rates over the examined period, which is more pronounced for lower consumption markets.

This research analyzes the evolution of CO2 emissions per capita in a sample of 141 countries during the period 1970–2014. The study develops a spatially augmented Green Solow model by taking into consideration technological externalities and interdependence in the process of production, which ultimately implies that CO2 emissions in an economy are affected by the economic characteristics in neighboring countries. The empirical model predicts convergence in CO2 emissions among countries which is examined by means of modern dynamic spatial panel econometric techniques. The multimodal distribution of the CO2 emissions is consistent with the existence of three spatial clubs. The space-time dynamics of the three clubs are analyzed by means of the Local Directional Moran Scatterplot and spatial panel model with heterogeneous parameters. Our analysis reveals the hypothesis of spatial convergence clubs is more consistent with the data than the hypothesis of conditional convergence.

This paper adopts a network data envelopment analysis (DEA) model combined with a window analysis approach to evaluate the ecological efficiency (eco‐efficiency) of 30 regions in China over 2000–2015. We also investigate the existence of eco‐efficiency convergence clubs among these regions and analyse the important factors that drive eco‐efficiency club formation. Our results reveal that, overall, Chinese regional eco‐efficiency deteriorated from 2000 to 2015. We find that there is a significant regional disparity in eco‐efficiency. Our convergence analysis indicates that Chinese regions converge into three eco‐efficiency clubs, suggesting that common economic and environment policies might have a limited impact on promoting regional eco‐efficiency and regionally‐tailored policies need to be designed. Finally, we find that forest coverage, R&D expenditure and pollution punishment are important determinants of convergence club membership.

This paper uncovers novel empirical patterns in the cross-country price mechanism using a nonlinear factor model and threshold regression analysis based on individual goods retail price data for a large panel of countries. To our knowledge, this is the first paper to find strong evidence for club convergence of retail prices. These clubs emerge due to the interaction of traded and nontraded factors. For example, countries physically closer to potential trade partners converge faster than countries in the high distance regime as long as they have low initial labor productivity or low initial income. Moreover, we find an asymmetry in the extent that arbitrage opportunities related to international trade are exploited, with low initial price regime countries exhibiting faster convergence from below than high initial price regime countries exhibit from above, consistent with less resistance to exporting than to importing due to political economy considerations. We interpret our findings as evidence of a local law of one price due to barriers to price convergence influencing the duration of the effect of price shocks. 33 7 1081 1097

The convergence hypothesis, which is developed in the context of growth economics, asserts that the income differences across countries are transitory, and developing countries will eventually attain the level of income of developed ones. On the other hand, convergence clubs hypothesis claim that the convergence can only be realized across groups of countries that share some common characteristics. In this study, we propose a new method to find convergence clubs that combines a pairwise method of testing convergence with maximum clique and maximal clique algorithms. Unlike many of those already developed in the literature, this new method aims to find convergence clubs endogenously without depending on a-priori classifications. In a Monte Carlo simulation study, the success of the method in finding convergence clubs is compared with a similar algorithm. Simulation results indicated that the proposed method perform better than the compared algorithm in most cases. In addition to the Monte Carlo, a new empirical evidence on the existence of convergence clubs is presented in the context of real data applications.

To study the role of financial development in economic growth, we apply an array of convergence tests designed to capture nonlinear transitional dynamics to real outputs per capita. Strong evidence of multiple convergence clubs is observed, implying that the clubs are formed based on the initial level of real output per capita and average growth rate. Our empirical results show that the stage of economic growth of each country plays an important role for the composition of the convergence clubs. Furthermore, financial development emerges to be a significant determinant, albeit plays differently in the economic growth of each convergence club.

In this paper, we examine the convergence hypothesis using a long memory framework that allows for structural breaks and does not rely on a benchmark country using both univariate and multivariate estimates of the long memory parameter d. Using per capita GDP gaps, we confirm the findings of non†stationarity and long memory behavior that have been found previously in the literature using univariate tests. However, the support for these findings is much weaker when using a multivariate framework, in which case we find more evidence of stationary behavior. Based on these results, we also investigate club formation, something that would suggest the presence of conditional convergence. We describe a club formation methodology using the sequential testing criteria that we have employed in our analysis as the basis for forming clusters or clubs of countries with similar convergence characteristics.

The aim of this work is to identify convergence clubs in 17 Latin American countries in terms of GDP per capita during the period 1990–2014. To do this, we apply the methodology developed by Philli...

We first employ β-conditional convergence and log t regression tests based on nonlinear time-varying factor model and club clustering algorithm to analyze the convergence characteristics of the development level of Internet finance in 335 prefecture-level cities in China. The result of log t regression test illustrates that there is no convergence as a whole in the development level of China's Internet finance. However, seven convergence clubs and a divergent group have been formed, and the development level and growth rate of Internet finance among these convergence clubs have shown obvious differences. Moreover, we also employ the Ordered Probit to explore the formation mechanism of the convergence clubs. The results reveal that the regions with a higher level of economic development, traditional financial development, economic openness and Internet development are more inclined to converge in a club with a higher Internet finance development level. Alternatively, the regions that are interfered with more by the government or that have a lower degree of marketization, tend to converge in a club with a lower level. Finally, according to the conclusions, we propose corresponding policy recommendations for promoting the regional coordinated development of China's Internet finance.

In this paper, we study the evolution of US divorce rates across states, from 1956 to 1998. Using a cluster algorithm, we identify different groups of states that converge on each other in the evolution of their divorce rates. We find strong empirical support for the club classification. For the whole 1956–1998 period, we find evidence of convergence in divorce rates for the majority of the states, but when we split the sample, a different pattern emerges. In the pre-unilateral divorce reform period (1956–1972), we find that most of the states had converging divorce rates within several convergence clubs, but the club classification of states significantly changed in the post-reform period (1973–1998). Finally, we analyze the explanatory factors of the club classification of states in both sub-periods, using geographical, socio-economic, and demographic variables.

This study examines the convergence patterns of Euro Area (EA) 17 countries’ sovereign bond yield spreads (relative to German bund) over the period of March 2002 to December 2015, by employing the convergence algorithm developed by Phillips and Sul (2007). The empirical findings suggest rejection of full convergence across the EA17 countries’ bond yields spreads, and the presence of a certain number of clubs. In particular, three subgroup convergence clubs emerge, with Cyprus, Spain, France, Greece, Ireland, Lithuania, Luxembourg, Latvia, Portugal and Slovenia in the first; Belgium, Italy and Malta in the second; and Austria, Finland, Netherlands and Slovakia in the third club. Moreover, there is also evidence that the first two clubs could be merged to form a larger convergence club. The transitional curves indicate that, despite short-run divergences, EU17 sovereign bond yield spreads tend to converge in the long-run, with the exception of those in Greece and Cyprus, indicating the strong attempts of most of the countries under investigation to adopt fiscal policies that eventually contribute to a convergence pattern.

This paper revisits the catching-up hypothesis among the 29 transition countries using the time series approach to investigate income convergence. In this study, we propose a model which specifies a trend function incorporating both sharp and smooth breaks using dummy variables and Fourier functions, respectively. Our empirical results indicate that two convergence clubs are forming among the transition countries and one club is among the rich and the other club is among the poor countries, where most middle income countries will disappear and move into one of the two clubs. Also, our results indicate that the 1980s was an ominous decade for growth in the transition countries with income in most diverging from the USA. With recovery in the 1990s, we find that in the 2000s income per capita in most of these countries was catching up toward the USA.

Using a global panel on research and development (R&D) expenditures, this paper documents that on average poor countries do far less R&D than rich as a share of GDP. This is arguably counter intuitive since the gains from doing the R&D required for technological catch up are thought to be very high and Griffith et al. (2004) have documented that in the OECD returns increase dramatically with distance from the frontier. Exploiting recent advances in instrumental variables in a varying coefficient context we find that the rates of return follow an inverted U: they rise with distance to the frontier and then fall thereafter, potentially turning negative for the poorest countries. The findings provide a new mechanism underlying the twin income peaks – poor countries cannot exploit technological transfer for convergence while middle income countries can converge rapidly to the frontier. The low returns found for poor countries does not diminish the centrality of technological transfer for development, but rather suggests the importance of factors complementary to R&D, such as education, the quality of scientific infrastructure, the overall functioning of the national innovation system, and the quality of the private sector, which become increasingly weak with distance from the frontier and offset the catch up effect.

This study extends the literature on the convergence of per capita carbon dioxide emissions by examining the 50 U.S. states including the District of Columbia in the aggregate, by sector, and by fossil fuel source using the Phillips-Sul club convergence approach for the period 1980 to 2013. The results indicate multiple convergence clubs in the aggregate, by sector (residential, commercial, industrial, transport, and electric power), and for two of the three fossil fuel sources (natural gas and coal) with full panel club convergence in the case of petroleum. The presence of multiple equilibria suggests that environmental policies should recognize the distinctive convergence paths associated with each cluster of states.

This paper extends the literature on the convergence of carbon dioxide emissions intensity and its determinants (energy intensity and the carbonization index) for six Central American countries over the period 1971 to 2014. Using the Phillips-Sul club convergence approach, the results indicate two distinct convergence clubs with respect to carbon dioxide emissions intensity and energy intensity. The carbonization index yields a single convergence club with Panama exhibiting non-convergent behavior. In light of the results, policies oriented toward the continued investment in renewable energy sources, clean energy technology, improved energy efficiency, restoration of forests, and movement toward carbon neutrality are desired goals to mitigate the environmental pressures associated with carbon dioxide emissions as a component of greenhouse gases.

It is by now well-established fact that human capital accumulation is decisive for explaining income differences across and within countries. However, while there is already a significant body of literature focusing on the analysis of income convergence, research on the dynamics of the underlying factors of economic development is still in its infancy. Our paper contributes to this literature by investigating the formation of human capital convergence clusters within China over the period 1985 to 2018 using Phillips and Sul’s (2007, 2009) log t test and various merging algorithms. It is the first paper to analyze the convergence dynamics of human capital within China. Our results indicate the existence of multiple human capital clubs with various provinces being stuck in a low human capital trap. Moreover, we find that human capital convergence clubs are to some extent formed on the basis of geographic region; in particular, there seems to be a core-periphery divide. We also study the factors that determine human capital club membership by using an ordered probit model. Most importantly, we find that the population and transportation density as well as the initial level of human capital are decisive for determining whether a country is on a high or low human capital development trajectory. Moreover, urbanization and institutional quality appear to have an indirect effect via a province’s initial human capital endowment. Public spending on education appears to play at best an insignificant role and even decreases the probability of belonging to the highest human capital club in some specifications.

This study investigates the degree of convergence in military expenditure and security outcome for the eight regional economic communities (RECs) of Africa spanning 1995–2015. We utilise the methodology of the Phillips and Sul convergence test to each of the region’s military expenditure and security outcome. The results of this study suggest that the convergence club of military expenditure and security outcome cannot be generalised across the RECs of African countries, and likewise for the overall convergence of the regions. The nonconvergence of the full sample and the presence of the different subgroup convergence clubs for both variables imply that RECs of African countries are characterised by individual factors which in turn determine an idiosyncratic course of their own path for defence and security policies. The empirics further confirm that the regions appear to have chosen dissimilar paths for their defence and security measures. Considering the cross-border and multiple security challenges facing the continent, this study recommend that African RECs harmonise their defence and security policies in order to achieve a convergence for a concerted security threats facing the regions.

This paper analyzes convergence in income inequality among US states using century-long data from 1917 to 2012. Levels of inequality substantially differ among US states, and convergence analysis examines whether those differences have decreased over time. We show weak evidence of inequality convergence from 1917 to 2012. Convergence is found only in the 1932–1985 subsample. Subsample analysis shows divergence in the 1917–1931 and 1986–2012 subsamples, where we find different convergence clubs. Lack of convergence, or the existence of various convergence clubs, suggests that some US states approach different steady states in the long run. These convergence clubs are mainly determined by human capital and government policies. We find that redistributive policies and easy access to education reduce inequality; capital gains tax is also an efficient policy measure.

This study develops a novel quantile eco-efficiency nonparametric estimator to test for the existence of possible convergence patterns across 29 OECD countries over the period 1953–2019. Our framework provides robust eco-efficiency estimators and allows us to test the convergence of countries’ estimated eco-efficiency levels at different quantiles. The results indicate that countries’ eco-efficiency performance has been increased over the sample years, formulating specific eco-efficiency convergence clubs.

Summary Phillips and Sul (Journal of Applied Econometrics 2009, 24, 1153–1185) provide an algorithm to identify convergence clubs in a dynamic factor model of economic transition and growth. We provide a narrow replication of their key results, using the open source R software instead of the original GAUSS routines. We are able to exactly replicate their results on convergence clubs, corresponding point estimates and standard errors. We comment on minor differences between their reported results and their clustering algorithm. We propose simple adjustments of the original algorithm to make manual intervention unnecessary. The adjustments allow automated application of the algorithm to other data. Copyright © 2016 John Wiley & Sons, Ltd.

We investigate club convergence in income per capita in 194 European NUTS-2 regions using a nonlinear, time-varying factor model that allows for individual and transitional heterogeneity. Moreover, we extend an existing club clustering algorithm with two post-clustering merging algorithms that finalize club formation. We also apply an ordered response model to assess the role of initial and structural conditions, as well as geographic factors. Our results indicate the presence of four convergence clubs in the EU-15 countries. In support of the club convergence hypothesis, we find that initial conditions matter for the resulting income distribution. Geographic clustering is quite pronounced; besides a north-to-south division, we detect high-income clusters for capital cities. We conclude that the main supranational policy challenge is the politically sensitive handling of a multi-speed Europe.

We investigate the convergence of per capita greenhouse gas emissions across Canadian provinces and territories at the aggregate and sectoral levels over the period 1990–2014. The study is carried out by means of the novel regression-based technique that tests for convergence and club convergence proposed by Phillips and Sul [2007. “Transition Modeling and Econometric Convergence Tests.” Econometrica 75 (6): 1771–1855, 2009. “Economic Transition and Growth.” Journal of Applied Econometrics 24 (7): 1153–1185], which accounts for the heterogeneity of provinces. We observe that Canadian provinces and territories are characterized by various convergence clubs at the aggregate and sectoral levels. The existence of multiple steady state equilibria suggests that Canadian policy could be distinctly tailored to provinces and territories in a way that equitably distributes the burden of greenhouse gas emission reduction efforts to achieve national emissions reduction targets.

This paper studies the evolution of US state health expenditure for a sample that covers 1966–2014. Our results provide evidence against the existence of a single pattern of behavior of personal health care expenditure across the US states. Rather, we can observe the existence of two statistically different convergence clubs. We cannot find evidence of convergence when we disaggregate health expenditure into its three main payers: Medicare, Medicaid and private health insurance expenditure, whilst we again find evidence of convergence clubs. However, the estimated clubs for Medicaid and private health insurance expenditure are statistically different that estimated for total health expenditure. Consequently, our results offer strong evidence of heterogeneity in the evolution of US health expenditure. The analysis of the forces that drive club creation shows that economic situation and some supply-side factors are important. We can also appreciate that some healthcare outcome variables are only related to private insurance health expenditure. The other health expenditures, thus, show a certain lack of efficiency which may be due to practices that have little benefit for patient health.

•Addressing the effect of economic interaction on regional output convergence as a separate phenomenon different from any political and institutional arrangements.•Testing overall convergence and determining convergence clubs in the region of Latin America and the Caribbean by using Sigma and Log t convergence tests.•Investigating the specific effects of globalizing flows of trade, capital and technology for both the short run and the long run by using the augmented ARDL model. Trying the first attempt to investigate the convergent effects of globalizing flows at both inter- and intra-regional levels. Trying the first attempt to differentiate the convergent effects of imports from those of exports.

This paper studies the worldwide evolution of energy intensity for a large sample of countries during the period 1990–2015, differentiating between non-renewable, non-clean and total energy intensity. This division allows us to establish more precise policy recommendations which, along with the use of the Phillips and Sul (2009) methodology, provides the novelty of the analysis. Our results refute recent evidence favouring the hypothesis of global convergence for all types of energy intensity. Grouping countries either by regions or by income level, the evidence against this hypothesis remains overwhelming, with very few exceptions. Nonetheless, we can observe the presence of several convergence clubs, whose creation strongly depends on energy prices as well as on external energetic dependency. In any event, results relating to the different types of energy intensity are varied, suggesting that previous policy recommendations aimed at tackling climate change based on total energy intensity analyses are questionable.

Previous studies of the income convergence hypothesis for Latin American economies indicate that almost all are not systematically closing their income gap with developed nations. The few studies to consider whether they instead exhibit club convergence—i.e., convergence to a steady-state equilibrium significantly inferior to that of the developed economies—offer little convincing evidence of this either. We argue that this reflects the limitations of their measure of relative income (which includes their sample’s average income) and/or the assumptions underlying the discrete-break unit-root tests they employ. By avoiding these limitations, we obtain evidence of two Latin American convergence clubs.

(ProQuest: ... denotes formulae omitted.)1. INTRODUCTIONCo-existence of extreme economic affluence and significant poverty is main paradox of the modern world. This holds true for both across and within nation. It has given birth to a prominent theme of economic convergence in the existing literature. Convergence is defined as a long run tendency of poor economies to grow faster than the rich counterparts over time to equalize the per capita income (Solow, 1956; Swan, 1956). Not surprising, there emerged various theoretical developments on economic growth and convergence of economies over the years with varied explanations. Such as, Solow (1956) and Swan (1956) provide a fundamental base for convergence hypothesis, albeit indirectly. Mankiw et al. (1992), in their seminal work, offers an empirical validation of Solow's model and extended it by including human capital to investigate the convergence hypothesis. These deployments raises an important question that whether deconomies with lower capital labor ratio grows faster than the economies with higher capital labor ratio. Or in simple way, does there exists convergence across economies? (Barro and Sala-i-Martin, 2004).To answer this essential question there stands a plethora of literature using different version of the same. The issue has been debated in economic growth literature since long time and has been dealt empirically by numerous studies. Barro and Sala-i-Martin (1991), in their notable work tested convergence hypothesis and found evidences of convergence for the states of United States. Similar attempts were made in Barro and Martin (1995), Sala-i-Martin (1996), Martin and Sanz (2003).1 Later on the literature extended in using time series and panel data models (Crown and wheat, 1995; Bernard and Jones, 1996a, b; Carlno and Mills, 1993, 1994; Vohra, 1996) however, they lack unanimity among their findings. This provides an incentive to the researchers to adopt advanced and more appropriate approaches to deal with convergence hypothesis comprehensively for exploring new insights in this field.On the other hand there is a growing literature on examination and identification of the convergence clubs with the help of various methodologies.2 Studies like Quah (1993a, b; 1997), Friedman (1992) detected Galton's fallacy3 in convergence criteria used by earlier studies. Quah in a series of papers proposed an intra-distributional approach 4 to examine the dynamic convergence through twin peaks process. The method uses log differential of the interested variable in a stochastic kernels process to find out the clubs of converging regions in absolute as well as conditional to the other influencing variables. The empirical investigation of this approach by Carlno and Mills (1996) and Bernard and Durlauf (1995, 1996) supports the evidence of convergence hypothesis. There are some studies that made use of different methodology to identify club convergence, such as, regression tree approach (Durlauf and Johnson, 1995), pair wise approach (Pesaran, 2007), nonlinear log test approach (Philips and Sul, 2007) to name important ones and is still in debate.As far as India is concerned, its growth pattern has shown a significant variation over time. It lacks a primeval and very important concomitant of equitable disbursement over the states. Several attempts were made to understand the convergence behaviour of Indian states. Such as Cashin and Sahay (1996), tested the hypothesis of convergence on 20 Indian states between the period of 1961 and 1991 and found no significant signs of convergence. Similar results were reported by Bajpai and Sachs (1996). Whereas the studies of Marjit and Mitra (1996), Rao et al. (1999) and Aiyar (2001) found divergent behavior of Indian states. Further, Nagaraj et al. (2000) found evidence of conditional convergence for 17 states over the period of 1960-94. Trivedi (2002), Singh and Srinivasan (2002) found weak converging behavior across Indian states for 1990 to1998. …

This study uses the club convergence methodology of Phillips and Sul (2007) for emerging economies spanning the period 1960–2013 to explore whether such convergence exists and whether the increase of international trade and foreign direct investment (FDI) flows has been a global or club phenomenon. We find the absence of a homogeneous convergence club. The results for FDI outflows also reach similar conclusions, suggesting the formation of convergence clubs by stage of development. These results suggest that policies that promote convergence in trade openness and FDI flows would permit countries to benefit from mutual interactions and by greater consistency and efficiency in trade regimes, thus permitting these countries to benefit from openness leading to a race to the top rather than bottom.