Empir Econ DOI 10.1007/s00181-012-0634-9 Spanish regions catching-up to Europe: an analysis based on the IB-MPI unit root procedure Antonio S. M. Arroyo · Aránzazu de Juan Received: 16 December 2011 / Accepted: 17 July 2012 © Springer-Verlag 2012 Abstract This article investigates the pair-wise convergence hypothesis of 17 Span- ish regions with respect to the European Union (EU) and Euro-Zone (EZ). Several definitions of convergence are taken into account. The IB-MPI unit root testing pro- cedure is then applied. A simultaneous approach based on the gap in levels and logs is developed to study convergence. The empirical results show incomplete catching-up in six cases with respect to both EU and EZ, and complete catching-up in nine with respect to EU and four with respect to EZ. When taking into account the behaviour of both gaps and loggaps, we further get four cases of cointegrated regions with respect to EZ and only one with respect to EU. Finally, there are four regions that diverge with respect to EU, but do converge with respect to the EZ. Only Baleares diverges with respect to both of them. Keywords IB-MPI unit-root test · Gaps vs. loggaps · Pair-wise time-series convergence · Structural Funds JEL Classification C12 · C22 · C52 · F02 1 Introduction The convergence between European regions was the great debate of the 1990s. The Delors Report (1989) is the origin of the European currency and marked the beginning A. S. M. Arroyo · A. de Juan (B ) Departamento de Economía Cuantitativa, E-III-306, Universidad Autónoma de Madrid, Av. Tomás y Valiente, 5 Cantoblanco, 28049 Madrid, Spain e-mail: aranzazu.dejuan@uam.es A. S. M. Arroyo e-mail: a.martin@uam.es 123