GDP PER Capita in Europe: Time Trends and Persistence

Abstract

This paper uses fractional integration techniques to show the existence of a negative correlation between the level of GDP per capita and its degree of persistence in a number of European countries. Weaker institutions and “shock absorbers” (financial markets to diversify risk and stabilization policies to counter shocks) might be the reason why countries with lower GDP per capita are characterized by a less effective management of the economy in response to shocks.