Economic convergence model
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 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Economic convergence model
Hi, thanks for the videos! I am trying to make a regression to estimate economic convergence betwen various countries I got the model but I don't know how combine o how to relate the data in eviews in order to do it. any information will be helpfull!

 Fe ddaethom, fe welon, fe amcangyfrifon
 Posts: 11981
 Joined: Tue Sep 16, 2008 5:38 pm
Re: Economic convergence model
You're going to have to provide considerably more detail on what you're trying to do.
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 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Re: Economic convergence model
Thanks, sorry for the delay I have been working on this, I want to estimate economic convergence across four countries, the teoric model is stated as;
(1/T)*(Ln(Yi,t/Yi,0)=c+B*Ln(Yi,0)+e
where the left side is the growth of GDP during the whole period and in the right side we have an intercept and as variable independent the log of the initial GDP. the theory states that there is economic convergence if there is a inverse relation betwen GDP growth and the inicial level of GDP. (B <0)
I have realize that maybe a good way to do it is using panel data models but I dont know how to set the equation on eviews, I have series of 24 years but following the model is it possible to tell the program to calculate the growth in the way of the model is written and then that relate it only with the initial gdp and how do i write it on the eviews? after a first regression I will add other variables such as Foreing investment, trade, etc, should I use rates of growth of those variables or how do I include then in this regression.
any suggestions are welcome,
Thanks
(1/T)*(Ln(Yi,t/Yi,0)=c+B*Ln(Yi,0)+e
where the left side is the growth of GDP during the whole period and in the right side we have an intercept and as variable independent the log of the initial GDP. the theory states that there is economic convergence if there is a inverse relation betwen GDP growth and the inicial level of GDP. (B <0)
I have realize that maybe a good way to do it is using panel data models but I dont know how to set the equation on eviews, I have series of 24 years but following the model is it possible to tell the program to calculate the growth in the way of the model is written and then that relate it only with the initial gdp and how do i write it on the eviews? after a first regression I will add other variables such as Foreing investment, trade, etc, should I use rates of growth of those variables or how do I include then in this regression.
any suggestions are welcome,
Thanks

 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Re: Economic convergence model
Hi there! any help? I would appreciate it very much!

 Fe ddaethom, fe welon, fe amcangyfrifon
 Posts: 11981
 Joined: Tue Sep 16, 2008 5:38 pm
Re: Economic convergence model
I have no idea what you're trying to do.
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 Nonnormality and collinearity are NOT problems!
 Posts: 3416
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Economic convergence model
I think the OP just needs to know how to get the first observation for each crosssection in panel.

 Fe ddaethom, fe welon, fe amcangyfrifon
 Posts: 11981
 Joined: Tue Sep 16, 2008 5:38 pm
Re: Economic convergence model
Code: Select all
show @firstsby(y,@crossid)
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 Nonnormality and collinearity are NOT problems!
 Posts: 3416
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Economic convergence model
So something like ...
?
Code: Select all
ls (1/@trend)*(log(y/@firstsby(y,@crossid)) c log(@firstsby(y,@crossid))
?

 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Re: Economic convergence model
Thanks, I already set my panel regression getting the results in the attachment the thing is that the coeficients are not significant and I wanted to try the fixed effects metod, getting the error "Near Singular Matrix".
 Attachments

 Imagen1.png (409.35 KiB) Viewed 3039 times

 Nonnormality and collinearity are NOT problems!
 Posts: 3416
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Economic convergence model
You are only using 4 observations. That's probably not what you want.

 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Re: Economic convergence model
Yes the thing is that those are the only four countries I need to study, later i will introduce more countries (but not more than 20) is there a way to make this result more robust? thank you.

 Nonnormality and collinearity are NOT problems!
 Posts: 3416
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Economic convergence model
You can't used fixed effects if you only have one observation per country.

 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Re: Economic convergence model
So I guess I have to change the model but that means that I could not apply or test the convergence theory in the basic form wich says that average gdp growth depends on the inicial gdp. or use other methods.

 Nonnormality and collinearity are NOT problems!
 Posts: 3416
 Joined: Wed Sep 17, 2008 2:25 pm
Re: Economic convergence model
Right. Or at least it says you can't use fixed effects, which don't make any sense here anyway.

 Posts: 8
 Joined: Mon Mar 23, 2015 4:45 pm
Re: Economic convergence model
Thank you, I confess I am not experienced in this at all and I am working on this for mi thesis, do you think the results I got are suitable for an economic thesis or not?, even if i make it clear that the coefficients obtained are not significant?
Can you recommend me another econometric way I can test this theory with only four countries and still respecting the theorical model?;
(1/T)*(Ln(GDPi,t/GDPi,0)=c+B*Ln(GDPi,0)+e
Thanks a lot!
Can you recommend me another econometric way I can test this theory with only four countries and still respecting the theorical model?;
(1/T)*(Ln(GDPi,t/GDPi,0)=c+B*Ln(GDPi,0)+e
Thanks a lot!
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