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On the Spatial Correlation of International Conflict Initiation and Other Binary and Dyadic Dependent Variables

Shali Luo and J. Miller ()

No 1306, Working Papers from Department of Economics, University of Missouri

Abstract: We examine spatially correlated interregional flows measured as binary choice outcomes. Since the dependent variable is not only binary and dyadic, but also spatially correlated, we propose a spatial origin-destination probit model and a Bayesian estimation methodology that avoids inconsistent maximum likelihood estimates. We apply the model to militarized interstate dispute initiations, observations of which are clearly binary and dyadic and which may be spatially correlated due to their geographic distribution. Using a cross-section of 26 European countries drawn from the period leading up to WWII, we find empirical evidence for target-based spatial correlation and sizable network effects resulting from the correlation. In particular, we find that the effect of national military capability of the potential aggressor, which is a significant determinant of conflict in either case, is overstated in a benchmark model that ignores spatial correlation. This effect is further differentiated by the geographic location of a country.

Keywords: spatial correlation; origin-destination flows; probit; militarized interstate disputes; correlates of war (search for similar items in EconPapers)
JEL-codes: C21 C25 F51 N4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm and nep-ure
Date: 2013-05-24
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Published in Regional Science and Urban Economics 2014

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