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THE EFFECTS OF PUBLIC CAPITAL ON REGIONAL CONVERGENCE IN TURKEY Ozlem Onder, Metin Karadag, Ertugrul Deliktas Department of Economics, Ege University.

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Presentation on theme: "THE EFFECTS OF PUBLIC CAPITAL ON REGIONAL CONVERGENCE IN TURKEY Ozlem Onder, Metin Karadag, Ertugrul Deliktas Department of Economics, Ege University."— Presentation transcript:

1 THE EFFECTS OF PUBLIC CAPITAL ON REGIONAL CONVERGENCE IN TURKEY Ozlem Onder, Metin Karadag, Ertugrul Deliktas Department of Economics, Ege University

2 Aim of the Study to investigate the impact of public capital on regional convergence in Turkey at NUTS 1 level by using dynamic panel data model for the time period

3 Table 1: Basic Data for Turkish Regions at NUTS I Level NUTS I RegionsPopulation in Year 2000 (000) Share of the total population in 2000 (%) GDP per capita in 2000 (YTL, in) (1987 prices) Real GDP as a Proportion of Turkey’s Average in 2000 Share of total Gross Domestic Product in 2000 Share of total Pub. Invest. Expend. on average ( ) Istanbul Western Marmara Aegean Eastern Marmara Western Anatolia Mediterranean Central Anatolia Western Black Sea Eastern Black Sea North Eastern Anatolia Middle Eastern Anatolia South Eastern Anatolia Turkey

4 Methodology Conditional Convergence Model (Mankiw et al. 1992) Dynamic Panel Data Model (Islam, 1995) = per capita real income, = real public capital stock,

5 Methodology Spatial Panel Data (Elhorst, 2003) Fixed Effect Spatial Lag Model (FSLM) Fixed Effect Spatial Error Model (FSEM)

6 Data Annual data on per capita real income and public capital stock at NUTS-1 level regions of Turkey between

7 Table 3: Estimation Results Dependent Variable: y it Pooled LSDVGMM-SYS Constant0.114 (0.98) (-1.35) y it *** (93.49) 0.880*** (35.39) 0.851*** (17.30) pubcap it (0.35) 0.056* (1.72) 0.154*** (2.30) Convergence rate λ R2R N252 Instruments diagnostics Hansen11.87 AR(1) c -2.87*** AR(2)-0.71

8 Table 4: Estimation Results with Spatial Effect Dependent variable: y it FSLM FSEM y it *** (18.481) 0.831*** (25.204) Pubcap it (1.345) (0.176) W.y it 0.09* (1.846)  0.613*** (0.000) Convergence rate λ R2R N252

9 Questions for further study Is it possible to apply spatial panel data models to dynamic panel data models Convergence rates What are specification tests for panel data


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