The distance decay effect and spatial reach of spillovers

J.Paul Elhorst, Ioanna Tziolas (), Chang Tan () and Petros Milionis
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Ioanna Tziolas: University of Groningen
Chang Tan: University of Groningen

Journal of Geographical Systems, 2024, vol. 26, issue 2, No 7, 265-289

Abstract: Abstract This paper quantifies and graphically illustrates the distance decay effect and spatial reach of spillover effects derived from a spatial Durbin (SD) model with parameterized spatial weight matrices. Building on attributes of the concept of spatial autocorrelation developed by Arthur Getis, we adopt a distance-based negative exponential spatial weight matrix and parameterize it by a decay parameter that is different for each spatial lag in this model, both of the regressand and of all regressors. The quantification and illustration are applied to the spatially augmented neoclassical growth framework, which we estimate using data for 266 NUTS-2 regions in the EU over the period 2000–2018. We find distance decay parameters ranging from 0.233 to 2.224 and spatial reaches ranging from 700 to more than 1500 km for the different growth determinants in this model. These wide ranges highlight the restrictiveness of the conventional SD model based on one common spatial weight matrix for all spatial lags.

Keywords: Regional economic growth; Growth spillovers; Regional proximity; Distance decay (search for similar items in EconPapers)
JEL-codes: C21 C23 O47 R12 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10109-024-00440-5

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