A note on convergence across Canadian provinces: new insights from the club clustering algorithm

This paper employs the newly-developed convergence tests introduced by Phillips and Sul (Econometrica 75:1771–1855, <CitationRef CitationID="CR17">2007</CitationRef>) to investigate convergence of real GDP per capita across Canadian provinces, as well as the transitional path of factors behind the convergence or divergence pattern. In contrast with previously published studies on Canadian provincial convergence, the analysis carried out in this paper allows for heterogeneous technology and reveals that Canadian provinces are characterized by distinct convergent clubs, that is, separate convergence clubs that converge to different steady states. We make the case that the findings presented in this paper are of utmost importance for Canadian policy-makers as they seek to develop effective policy measures to address regional economic disparities. Copyright Springer-Verlag 2013