Evidence of convergence in Eastern Europe: a quantile regression approach

The change of regimes in former Soviet Bloc provides an opportunity to study the neoclassical growth theory in a region of the world that was excluded before because of the presence of centrally planned economies. A concern is whether these newly formed economies are converging to a unique steady state or are diverging. A common approach to the study of neoclassical growth theory is the use of beta-convergence. However, the approach suffers from several malaises, most notably the regression to the mean. An alternative approach relies on quantile regression to overcome this problem. Different quantile regressions controlling the customary factors are utilised to determine the patterns of growth rates of the former communist countries.