The Application of Hidden Markov Models to the Analysis of Real Convergence

Bernardelli, Michał; Próchniak, Mariusz; Witkowski, Bartosz

doi:10.12775/dem.2017.004

Cited by 2 publications

(3 citation statements)

References 21 publications

(21 reference statements)

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“…the scenario analysis based on the HMM models. This procedure has been described by Bernardelli et al (2017aBernardelli et al ( , 2017b. The cited authors verify the hypothesis of the HMM convergence for a variety of variables: not only GDP per capita levels and GDP growth rates, but also inflation and unemployment rates, household and government consump-tion, net exports, and loans (including non-performing loans).…”

Section: Simulationsmentioning

confidence: 87%

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Time stability of the impact of institutions on economic growth and real convergence of the EU countries: implications from the hidden Markov models analysis

Bernardelli

Próchniak

Witkowski

2021

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Research background: It is not straightforward to identify the role of institutions for the economic growth. The possible unknown or uncertain areas refer to nonlinearities, time stability, transmission channels, and institutional complementarities. The research problem tackled in this paper is the analysis of the time stability of the relationship between institutions and economic growth and real economic convergence. Purpose of the article: The article aims to verify whether the impact of the institutional environment on GDP dynamics was stable over time or diffed in various subperiods. The analysis covers the EU28 countries and the 1995?2019 period. Methods: We use regression equations with time dummies and interactions to assess the stability of the impact of institutions on economic growth. The analysis is based on the partially overlapping observations. The models are estimated with the use of Blundell and Bond?s GMM system estimator. The results are then averaged with the Bayesian Model Averaging (BMA) approach. Structural breaks are identified on the basis of the Hidden Markov Models (HMM). Findings & value added: The value added of the study is threefold. First, we use the HMM approach to find structural breaks. Second, the BMA method is applied to assess the robustness of the outcomes. Third, we show the potential of HMM in foresighting. The results of regression estimates indicate that good institution reflected in the greater scope of economic freedom and better governance lead to the higher economic growth of the EU countries. However, the impact of institutions on economic growth was not stable over time.

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Section: Simulationsmentioning

confidence: 87%

“…However, the other variables (e.g. GDP per capita) can also be tested.4 SeeBernardelli et al (2017b) for details of calculating the rate of HMM convergence.…”

mentioning

confidence: 99%

Time stability of the impact of institutions on economic growth and real convergence of the EU countries: implications from the hidden Markov models analysis

Bernardelli

Próchniak

Witkowski

2021

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“…There exist many methodological approaches to convergence in economics [Bernardelli et al, 2017]: e.g., beta-convergence based on the growth theory [Solow, 1956], which occurs when poor countries/regions grow faster than rich ones (and catch up with them); and sigma-convergence, which refers to the reduction of disparities over time [Barro and Sala-i-Martin, 1992;Quah, 1993;Sala-i-Martin, 1996;later, e.g., Monfort, 2008;Young et al, 2008;Lessmann and Seidel, 2015], broken down into subgroups (club convergenceintroduced by Baumol, 1986, developed by, e.g., Durlauf andJohnson, 1995;Galor, 1996;Canova, 2004;Phillips and Sul, 2007;Alexiadis, 2012;Maynou et al, 2021;Ripollés, Vidal-Meliá, 2022).…”

Section: Concept and Measurement Of Convergencementioning

confidence: 99%

Trends in income taxation: are taxes converging in Central and Eastern European countries?

Bernardelli,

Felis,

Jamroży

et al. 2023

International Journal of Management and Economics

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The paper examines the convergence of tax systems in Central and Eastern European countries (CEECs) over the period 1995–2018. Due to the increasing impact of tax competition, we have focused on income taxes, in particular, corporate ones. We have identified the factors that influence the taxation system and trends in income taxation in the CEECs by adapting the hidden Markov model approach. We find that many CEECs have reduced income taxation in the analysis period, mainly by lowering tax rates. Corporate income taxes have also decreased in many CEECs in the same period; however, the reverse has been observed too. Both convergence and divergence have been identified among the CEECs over the period considered. The speed of these processes based on the used variables varied depending on both exogenous and endogenous factors. These factors have been diagnosed as being specific to the periods of tax reforms, i.e., before and after accession to the European Union (EU) and the global financial crisis.

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The Application of Hidden Markov Models to the Analysis of Real Convergence

Abstract: J E L Classification: C61, E32, O47, O52.

Cited by 2 publications

References 21 publications

Time stability of the impact of institutions on economic growth and real convergence of the EU countries: implications from the hidden Markov models analysis

Time stability of the impact of institutions on economic growth and real convergence of the EU countries: implications from the hidden Markov models analysis

Trends in income taxation: are taxes converging in Central and Eastern European countries?

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