Is the European Union still a convergence machine?

Nagy, Sándor Gyula ORCID: and Šiljak, Dženita (2022) Is the European Union still a convergence machine? Acta Oeconomica, 72 (1). pp. 47-63. DOI

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We investigate whether the European Union can be considered as a convergence machine after the 2008/ 2009 financial crisis. To do so, we econometrically test the relationship between the per capita GDP growth rate and macroeconomic variables in the period of 2004–2018, further subdivided into three periods: 2004– 2008, 2009–2013 and 2014–2018. We hypothesize that the 2008/2009 financial crisis had a negative effect on the σ and b-convergence process. Our results support the convergence hypothesis, namely that the poor countries tend to grow faster than the rich countries. The convergence rates ranged between 1.71% and 4.51%. The negative effects of the crisis on convergence have been identified only for the absolute convergence. Our findings demonstrate that economic openness, inflation and government integrity have a positive impact on growth. The effects of unemployment have not been identified.

Item Type:Article
Uncontrolled Keywords:σ-convergence, b-convergence, European union, new member states, financial crisis
JEL classification:F15 - Economic Integration
O47 - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O52 - Economywide Country Studies: Europe
Subjects:Economic development
International economics
ID Code:7351
Deposited By: MTMT SWORD
Deposited On:29 Mar 2022 09:05
Last Modified:29 Mar 2022 09:07

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