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SUMMARYThis paper introduces a new measure of dependence or jointness among explanatory variables. Jointness is based on the joint posterior distribution of variables over the model space, thereby taking model uncertainty into account. By looking beyond marginal measures of variable importance, jointness reveals generally unknown forms of dependence. Positive jointness implies that regressors are complements, representing distinct but mutually reinforcing effects. Negative jointness implies that explanatory variables are substitutes and capture similar underlying effects. In a cross-country dataset we show that jointness among 67 determinants of growth is important, affecting inference and informing economic policy.

In this paper we test for regional convergence clusters across the EU. We utilise a methodology that allows for the endogenous selection of regional clusters using a multivariate test for stationarity, where the number and composition of clusters are determined by the application of pairwise tests of regional differences in per capita output over time. To interpret the composition of the resulting convergence clusters, the latter are tested against a number of possible groupings suggested by recent theories and hypotheses of regional growth and convergence. Further, our method allows regional convergence clusters to vary over time.Since the mid-1980s, the study of long-term growth has made a major re-appearance on the research agenda in economics. An important stimulus for this revival has been the renewed interest in the empirics of growth, and especially the evidence that rates of long-run convergence of per capita output and incomes between nations, and even between regions within nations, appear to be much slower and far more variable than predicted by the standard Solow-Swan neoclassical growth model (Abramovitz, 1986;Boltho and Holtham, 1992). One consequence has been the emergence of a 'new' growth theory that incorporates increasing returns and technical change within the production function as determinants of the (endogenous) long-term growth rate (Romer, 1986;Lucas, 1988;Grossman and Helpman, 1994;Barro and Sala-i-Martin, 1997). Although several variants of this new endogenous growth theory have been developed, all permit a wider set of possibilities with regard to convergence behaviour. Some variants predict 'conditional' convergence of national (regional) per capita incomes to different long-run steady states that depend on initial national (regional) differences in institutional set-up, economic structure, tastes and so on. Others allow for so-called 'club' convergence among countries (regions) with similar structural and related conditions. Still others, including models that assume that technological advance is highly localised and its diffusion slow, predict persistent or even divergent differences in national (or regional) per capita output and incomes as long run outcomes (Bertola, 1993).At the same time, the emergence over the past decade or so of the so-called 'new economic geography' models of industrial location and agglomeration has highlighted how many sources of increasing returns are associated with Marshalliantype external localisation economies (such as access to specialised local labour inputs, local market access and size effects, local knowledge spillovers, and the like). These models provide a rich set of possible long-run regional growth patterns that depend, among other things, on the relative importance of transport costs and localisation economies (Fujita et al., 1999;Brackman et al., 2001;

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In this article we examine the determinants of institutional change using a panel dataset comprising 25 transition economies. A defining characteristic of our approach is that we treat institutional change as a multidimensional unobserved variable, accounting for the fact that each of our indicators represents a noisy signal. Our results suggest that institutional change is significantly path dependent. However, policy can to some extent break this dependence through economic and political liberalisation at the start of the transition and with the help of an external anchor such as EU accession. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.