On the measurement of convergence as an ongoing process

Abstract

Time-varying parameter techniques are commonly used to examine whether convergence in income has been a stable process. This article incorporates additional local features to a model studying 14 EU countries, thereby providing better estimates of the current state of the system when the relative income series are highly nonlinear.

Notes

¹ Detailed descriptions of the Kalman filter recursive algorithm can be found in Cuthbertson et al . (1992, Ch. 7) and Hamilton (1994a, b, Ch. 13).