Short-Run Regional Forecasts: Spatial Models through Varying Cross-Sectional and Temporal Dimensions

Matías Mayor () and Roberto Patuelli ()

Working Paper series from Rimini Centre for Economic Analysis

Abstract: In any economic analysis, regions or municipalities should not be regarded as isolated spatial units, but rather as highly interrelated small open economies. These spatial interrelations must be considered also when the aim is to forecast economic variables. For example, policy makers need accurate forecasts of the unemployment evolution in order to design short- or long-run local welfare policies. These predictions should then consider the spatial interrelations and dynamics of regional unemployment. In addition, a number of papers have demonstrated the improvement in the reliability of long-run forecasts when spatial dependence is accounted for. We estimate a heterogeneous coefficients dynamic panel model employing a spatial filter in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment, as well as a spatial vector-autoregressive (SVAR) model. We compare the short-run forecasting performance of these methods, and in particular, we carry out a sensitivity analysis in order to investigate if different number and size of the administrative regions influence their relative forecasting performance. We compute short-run unemployment forecasts in two countries with different administrative territorial divisions and data frequency: Switzerland (26 regions, monthly data for 34 years) and Spain (47 regions, quarterly data for 32 years)

Keywords: regional forecasts; spatial econometrics; dynamic panel; SVAR (search for similar items in EconPapers)
Date: 2012-06, Revised 2012-10
New Economics Papers: this item is included in nep-for, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published in E. Fernández-Vazquez and F. Rubiera-Morollón (eds) Defining the Spatial Scale in Modern Regional Analysis: New Challenges from Data at Local Level, Springer Verlag, Berlin, 173-192, 2012

Downloads: (external link)
http://www.rcea.org/RePEc/pdf/wp15_12.pdf (application/pdf)

Related works:
Chapter: Short-Run Regional Forecasts: Spatial Models through Varying Cross-Sectional and Temporal Dimensions (2012)
Working Paper: Short-Run Regional Forecasts: Spatial Models through Varying Cross-Sectional and Temporal Dimensions (2012)
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:rim:rimwps:15_12

Access Statistics for this paper

More papers in Working Paper series from Rimini Centre for Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Marco Savioli ().