Is there Really Divergence Across Turkish Provinces? Evidence From the Lagrange Multiplier Unit Root Tests

Abstract

Using data on per capita income among 67 provinces in Turkey over the period 1975–2001, regional stochastic convergence is evaluated. This study employees the LM unit root test to endogenously determine the number and location of structural breaks for each province. On the contrary, convergence literature on Turkish provinces, both univariate and panel LM tests provide strong evidence for convergence except for the provinces of Bitlis and Erzurum when structural breaks are taken into account. Our empirical results are in accordance with the neoclassical model.

Acknowledgements

The authors are grateful to the anonymous referee's valuable comments and suggestions on the manuscript. Remaining errors are ours.

Notes

See Karaca (2004), Erlat (2005) and Erlat and Özkan (2006) for detailed knowledge about the data.

The optimal lag length k is selected by ‘t-sig’ approach which accommodates serial correlation in the errors and k _max as 7.