View source: R/mergeDivergent.R

mergeDivergent | R Documentation |

Merges divergent units according the algorithm proposed by von Lyncker and Thoennessen (2017)

mergeDivergent(clubs, time_trim, estar = -1.65)

`clubs` |
an object of class |

`time_trim` |
a numeric value between 0 and 1, representing the portion of
time periods to trim when running log t regression model; if omitted, the same
value used for |

`estar` |
a numeric value indicating the threshold |

von Lyncker and Thoennessen (2017) claim that units identified as divergent by the basic clustering procedure by Phillips and Sul might not necessarily still diverge in the case of new convergence clubs detected with the club merging algorithm. To test if divergent units may be included in one of the new convergence clubs, they propose the following algorithm:

Run a log t-test for all diverging units, and if

*t(k) > -1.65*all these units form a convergence club (This step is implicitly included in Phillips and Sul basic algorithm);Run a log t-test for each diverging units and each club, creating a matrix of t-values with dimensions

*d x p*, where each row d represents a divergent region and each column p a convergence club;Take the highest

*t-value > e**and add the respective region to the respective club and restart from the step 1. the authors suggest to use*e* = t = -1.65*;The algorithm stops when no t-value > e* is found in step 3, and as a consequence all remaining units are considered divergent.

A list of Convergence Clubs, for each club a list is return with the
following objects: `id`

, a vector containing the row indices
of the units in the club; `model`

, a list containing information
about the model used to run the t-test on the units in the club;
`unit_names`

, a vector containing the names of the units of the club (optional,
only included if it is present in the `clubs`

object given in input).

Phillips, P. C.; Sul, D., 2007. Transition modeling and econometric convergence tests. Econometrica 75 (6), 1771-1855.

Phillips, P. C.; Sul, D., 2009. Economic transition and growth. Journal of Applied Econometrics 24 (7), 1153-1185.

von Lyncker, K.; Thoennessen, R., 2017. Regional club convergence in the EU: evidence from a panel data analysis. Empirical Economics 52 (2), 525-553

`mergeClubs`

, Merges a list of clubs created by `findClubs`

;

data("filteredGDP") #Cluster Countries using GDP from year 1970 to year 2003 clubs <- findClubs(filteredGDP, dataCols=2:35, unit_names = 1, refCol=35, time_trim = 1/3, cstar = 0, HACmethod = "FQSB") summary(clubs) # Merge clusters and divergent units mclubs <- mergeClubs(clubs, mergeDivergent=TRUE) summary(mclubs)

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