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We analyse the robustness of potential determinants of the differences in the long-run growth rate of GDP per capita across EU regions using quantile regression. We propose using Bayesian Model Averaging (BMA) methods on the class of quantile regression models in order to assess the set of relevant covariates in cross-regional growth regressions allowing for different effects across quantiles of the growth variable. The results indicate that the set of robust growth determinants differs across quantiles. The set of robust variables includes skill endowment and initial GDP per capita when not and physical investment when taking country fixed effects into account. However, even when a variable is found to be robust across quantiles the estimated impact on growth of that variable is often found to differ across the quantiles.

We use Bayesian Model Averaging (BMA) to evaluate the robustness of determinants of economic growth in a new dataset of 255 European regions in the period 1995-2005. We use three different specifications based on (i) the cross-section of regions, (ii) the cross-section of regions with country fixed effects, and (iii) the cross-section of regions with a spatial autoregressive (SAR) structure. Our results indicate that the income convergence process between countries is dominated by the catching-up process of regions in Central and Eastern Europe (CEE), whereas convergence within countries is mostly a characteristic of regions in old EU member states. We find robust evidence of asymmetric growth performance within countries, with a growth bonus in regions containing capital cities which is particularly sizeable in CEE countries, as well as a robust positive effect of education. The results are robust if we allow for spatial spillovers a priori. In this setting, we also find robust evidence of positive spillovers leading to growth clusters.

AbstractThis article reassesses the impact of inflation on long‐term growth for a panel of 14 European Union countries in the years prior to monetary unification. While previous research mostly focuses on a linear nexus or allows for a piecewise linear relationship with a single threshold, this study takes account of a more complex relationship. The empirical estimates for the full EU sample confirm the hypothesis that the relationship between inflation and growth is positive for very low inflation rates (that is, below an estimate of 1.6 per cent), insignificant thereafter and negative for high, two‐digit inflation levels. The estimate of the inflation level that divides the insignificant from the negative effect is found to be higher in the group of traditional cohesion countries than for the rest of the sample.

Using a theoretical model based on dynamic optimizing agents, we test empirically the Ricardian equivalence proposition (REP) for the EU‐15 countries. The theoretical setting allows us to obtain estimates of the structural parameters of the model and to test directly the hypothesis implied by the REP. Using recently developed end‐of‐sample cointegration breakdown tests, we find evidence of a change in the fiscal behaviour of individuals during the last decade—after the introduction of a fiscal rule, namely the Maastricht criteria—for most countries in the sample. The results concerning the direction of change are mixed.

The book examines problems associated with green growth and sustainable development on the basis of recent contributions in economics, natural sciences and applied mathematics, especially optimal control theory. Its main topics include pollution, biodiversity, exhaustible resources and climate change. The integrating framework of the book is dynamic systems theory which offers a common basis for multidisciplinatory research and mathematical tools for solving complicated models, leading to new insights in environmental issues.?