Convergence of testing and positivity rates for the COVID-19 pandemic: evidence from Germany and Italy

ABSTRACT

Purpose: This paper aims to analyze the convergence of the testing and positivity rates for the COVID-19 pandemic focusing on Germany and Italy. Design/methodology/approach: The authors employ the two-regime threshold autoregressive (TAR) panel unit root test by using the weekly data in the period of 202003-202104. Findings: Following finding out that the testing and positivity rates are nonlinear, the authors determine that the transition country between the two regimes is Italy for the testing rates and Germany for the positivity rates. Their findings support the partial convergence for the testing rates for Germany and Italy. On the other hand, the authors could not find any convergence for the positivity rates of these two countries. Originality/value This paper contributes to academic literature in several ways. Firstly, to the best of their knowledge, this paper is the first study that analyzes the convergence of testing and positivity data. This paper further focuses on two Euro-Area countries which have suffered significantly from the COVID-19 pandemic. In addition, the authors employ the two-regime threshold autoregressive (TAR) panel unit root proposed by Beyaert and Camacho (2008) in their empirical analysis. This recent panel data methodology aims to test real convergence in a nonlinear framework by incorporating the threshold model, panel data unit root test and the calculation of critical values by bootstrap simulation.