Functional-Coefficient Spatial Durbin Models with Nonparametric Spatial Weights: An Application to Economic Growth

Mustafa Koroglu and Yiguo Sun
Additional contact information
Mustafa Koroglu: Department of Economics and Finance, University of Guelph, Guelph, ON N1G2W1, Canada

Econometrics, 2016, vol. 4, issue 1, 1-16

Abstract: This paper considers a functional-coefficient spatial Durbin model with nonparametric spatial weights. Applying the series approximation method, we estimate the unknown functional coefficients and spatial weighting functions via a nonparametric two-stage least squares (or 2SLS) estimation method. To further improve estimation accuracy, we also construct a second-step estimator of the unknown functional coefficients by a local linear regression approach. Some Monte Carlo simulation results are reported to assess the finite sample performance of our proposed estimators. We then apply the proposed model to re-examine national economic growth by augmenting the conventional Solow economic growth convergence model with unknown spatial interactive structures of the national economy, as well as country-specific Solow parameters, where the spatial weighting functions and Solow parameters are allowed to be a function of geographical distance and the countries’ openness to trade, respectively.

Keywords: functional coefficients; local linear regression; nonparametric 2SLS estimator; series estimator; Solow economic growth convergence model; spatial Durbin model (search for similar items in EconPapers)
JEL-codes: B23 C C00 C01 C1 C2 C3 C4 C5 C8 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2225-1146/4/1/6/pdf (application/pdf)
https://www.mdpi.com/2225-1146/4/1/6/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecnmx:v:4:y:2016:i:1:p:6-:d:63356

Access Statistics for this article

Econometrics is currently edited by Ms. Jasmine Liu

More articles in Econometrics from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().