MAPS OF CONTINUOUS SPATIAL DEPENDENCE

Fernando Lopez (), Ana Angulo and Jesus Mur
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Fernando Lopez: Department of Quantitative Methods and Computing, Technical University of Cartagena (Spain)
Authors registered in the RePEc Author Service: Lopez Hernandez Fernando A ()

Region et Developpement, 2009, vol. 30, 11-34

Abstract: Heterogeneity is one of the distinguishing features in spatial econometric models. It is a frequent problem in applied work and can be very damaging for statistical inference. In this paper, we focus on the problems implied by the existence of instabilities in the mechanism of spatial dependence in a spatial lag model, assuming that the other terms of the specification remain stable. We begin the discussion with the role played by the algorithms of local estimation in detecting the instabilities. Problems appear when one must decide what to do once the existence of heterogeneity has been confirmed. The logical reaction is trying to parameterize this lack of stability. However, the solution is not obvious. Assuming that a set of indicators related to the problem has been identified, we propose a simple technique to deal with the unknown functional form. In the final part of the paper, we present some Monte Carlo evidence and an application to evaluate the instability in the mechanisms of spatial dependence in the convergence process of the European Regions.

Keywords: DEPENDENCE; LOCAL ESTIMATION; MONTE-CARLO; SPATIAL INSTABILITY (search for similar items in EconPapers)
JEL-codes: C21 C50 O11 R15 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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