Estimation of the Spatial Weights Matrix under Structural Constraints

Arnab Bhattacharjee and Chris Jensen-Butler

No 2011-48, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds de nition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model the spatial weights matrix is only partially identi ed, and is fully identifi ed under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial di¤usion in housing demand.

Keywords: Spatial econometrics; Spatial autocorrelation; Spatial weights matrix; Spatial error model; Housing demand; Gradient projection (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-ecm, nep-geo and nep-ure
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Estimation of the spatial weights matrix under structural constraints (2013)
Working Paper: Estimation of the Spatial Weights Matrix under Structural Constraints (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:sirdps:293

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