Spatial lag dependence in the presence of missing observations

Takahisa Yokoi ()
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Takahisa Yokoi: Tohoku University

The Annals of Regional Science, 2018, vol. 60, issue 1, No 2, 25-40

Abstract: Abstract We explore the estimation effectiveness of spatial lag models in the presence of missing observations. Spatial lag models are used to measure interdependency between dependent variables. If there are no missing data, it is easy to interpret this spatial autocorrelation process. Very sparsely sampled data are sometimes used in empirical studies. For such data, we observe only a small part of a population containing possible mutual dependencies. Simulation studies based on artificial data confirm the relation between the sampling rate and selection ratio of spatial and non-spatial models. Our findings include the following: (1) Negative spatial autocorrelation of the data-generating process (DGP) may not be observed. (2) Positive spatial autocorrelation of the DGP may be observed, but it is downward-biased. (3) We obtain less-biased estimates if we use a non-row-standardized weight matrix. (4) Non-spatial models tend to be selected in preference to the correct model, the spatial lag model. (5) Estimates of regression coefficients remain almost unbiased.

JEL-codes: C13 C21 C51 C52 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00168-015-0737-2

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