Where is the Economics in Spatial Econometrics?
Corrado, L. and Fingleton, B. (2010) Where is the Economics in Spatial Econometrics? Discussion paper. University of Strathclyde, Glasgow.
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Abstract
Spatial econometrics has been criticized by some economists because some model specifications have been driven by data-analytic considerations rather than having a firm foundation in economic theory. In particular this applies to the so-called W matrix, which is integral to the structure of endogenous and exogenous spatial lags, and to spatial error processes, and which are almost the sine qua non of spatial econometrics. Moreover it has been suggested that the significance of a spatially lagged dependent variable involving W may be misleading, since it may be simply picking up the effects of omitted spatially dependent variables, incorrectly suggesting the existence of a spillover mechanism. In this paper we review the theoretical and empirical rationale for network dependence and spatial externalities as embodied in spatially lagged variables, arguing that failing to acknowledge their presence at least leads to biased inference, can be a cause of inconsistent estimation, and leads to an incorrect understanding of true causal processes.
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Item type: Monograph(Discussion paper) ID code: 67921 Dates: DateEventDecember 2010PublishedNotes: Discussion paper. Subjects: Social Sciences > Communities. Classes. Races > Regional economics. Space in economics Department: Strathclyde Business School > Economics Depositing user: Pure Administrator Date deposited: 21 May 2019 12:18 Last modified: 22 Sep 2024 01:28 URI: https://strathprints.strath.ac.uk/id/eprint/67921