A new approach in the analysis of european countries convergence: Lessons for the economies of central and eastern europe

In this paper, we use the concept of convergence based on the stationarity of cross-country per capita output differences and propose new on the persistence and change of persistence of data, taking into consideration the occurrence of structural changes. We consider data on per capita output of the European Union member states, considering the Western European economies and the Eastern European economies in a total of 23 countries. Our objective is to analyze the convergence process of these economies and, in particular to conclude whether there has been a convergence and/or divergent process between the Western European economies and between those economies and the Eastern European economies over the sample period. By considering different sub-periods, the results suggest that in general the Western European countries have reduced their per capita output gaps, being Ireland the only country reporting divergence until the end of the 80s. Bulgaria, Hungary, Poland and Romania have reported divergence to Western European countries over the period from the 50s to the 90s. Finally, per capita output gaps of other Eastern economies have been reduced since the 1990s, in particular the cases of Latvia and Lithuania