THE REAL CONVERGENCE OF CEE COUNTRIES: A STUDY OF REAL GDP PER CAPITA
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The paper examines the unconditional sigma and time-series convergence of a real GDP per capita (measured in national currencies and euros) for CEE8 countries during the 1995 : Q1 – 2011 : Q1 period by applying the unit root framework using the DF-GLS test and the Lee and Strazicich (2003; 2004) test, which allows for endogenous breaks in trends and constants. We selected Germany as a benchmark country for relative real GDP per capita because of its geographical and economical position relative to all CEE8 countries. We have found that both sigma convergence and time-series convergence were present for most of the CEE8 countries prior to the breaks in trends, but after the breaks, the convergence slowed or reversed and thus indicated divergence.
642 – 656
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