Abstract
We introduce a Bayesian hierarchical regression model that extends the traditional least-squares regression model used to estimate gravity or spatial interaction relations involving origin-destination flows. Spatial interaction models attempt to explain variation in flows from n origin regions to n destination regions resulting in a sample of N = n 2 observations that reflect an n by n flow matrix converted to a vector. Explanatory variables typically include origin and destination characteristics as well as distance between each region and all other regions. Our extension introduces latent spatial effects parameters structured to follow a spatial autoregressive process. Individual effects parameters are included in the model to reflect latent or unobservable influences at work that are unique to each region treated as an origin and destination. That is, we estimate 2n individual effects parameters using the sample of N = n 2 observations. We illustrate the method using a sample of commodity flows between 18 Spanish regions during the 2002 period.
This paper has been previously published in the Journal of Geographical Systems. Special Issue on “Advances in the Statistical Modelling of Spatial Interaction Data”, Vol. 15, Number 3/July 2013, ©Springer-Verlag Berlin Heidelberg, pp. 265–289.
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Notes
- 1.
- 2.
For our conventional spatial contiguity matrix D which has zeros on the diagonal and row-sums of unity, the inverse is well defined for ρ < 1.
- 3.
Of course for the destination effects parameters we have: \(\phi = (I_{n} -\rho _{d}D)^{-1}u_{d}\).
- 4.
Row-sums of unity and zeros on the main diagonal.
- 5.
Of course, one of the regions would need be eliminated from each of the matrices V, W to avoid have a perfect linear combination of dummy variables.
- 6.
For clarity of presentation, we set forth conditional distributions involved in our sampling scheme in vector-matrix notation rather than the moment matrix form.
- 7.
Weexclude the intraregional model from the data generating process as well as estimation procedure.
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Appendix: Details Regarding the MCMC Sampler
Appendix: Details Regarding the MCMC Sampler
First, we show that the conditional posterior for δ takes the multivariate form presented in the text.
Where as reported in the text:
In this appendix we follow Smith and LeSage (2004) in deriving the conditional posterior for the spatial autoregressive effects parameters θ. They note that:
from which it follows that:
The conditional posteriors for σ o 2, σ d 2:
Which is proportional to the inverse gamma distribution reported in the text. A similar approach leads to p(σ d 2 | …), and the conditional posterior for σ ɛ 2:
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LeSage, J.P., Llano, C. (2016). A Spatial Interaction Model with Spatially Structured Origin and Destination Effects. In: Patuelli, R., Arbia, G. (eds) Spatial Econometric Interaction Modelling. Advances in Spatial Science. Springer, Cham. https://doi.org/10.1007/978-3-319-30196-9_9
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DOI: https://doi.org/10.1007/978-3-319-30196-9_9
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