TY - UNPB
T1 - Dundee Discussion Papers in Economics 254
T2 - Estimation of the Spatial Weights Matrix under Structural Constraints
AU - Bhattacharjee, Arnab
AU - Jensen-Butler, Chris
PY - 2011
Y1 - 2011
N2 - While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds definition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model the spatial weights matrix is only partially identified, and is fully identified under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial diffusion in housing demand.
AB - While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds definition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model the spatial weights matrix is only partially identified, and is fully identified under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial diffusion in housing demand.
KW - Spatial econometrics
KW - Spatial autocorrelation
KW - spatial weights matrix
KW - Spatial error model
KW - Housing demand
KW - Gradient projection
M3 - Discussion paper
T3 - Dundee Discussion Papers in Economics
BT - Dundee Discussion Papers in Economics 254
PB - Economic Studies, University of Dundee
CY - Dundee
ER -