The Evaluation of Suitability of Spatial Error STAR Model for Modeling Convergence of Social Welfare of Iran's Provinces

T he purpose of this paper is the evaluation of suitability ofspatial error STAR model for modeling convergence of social welfare of Iran's provinces between 2000 and 2013. In this paper the LM tests show that the non-linear method is appropriate for convergence evaluation. In addition, the results indicate that 2 groups of provinces are separable: group 1 in which the social welfare growth is affected by the welfare of the regions themselves and group 2 in which it is not merely the effect of social welfare of the regions themselves, and spatial effects are observed among the provinces of this group. Moreover, based on our results, there is convergence among the regions of the first group while there is no convergence among the provinces of the second group.