Abstract
The theoretical model laid out in Part II can be directly translated to a spatial econometric model specification, with output growth as the dependent variable, and two explanatory variables, which are also lagged in space, thus making a total of four independent variables, and in addition there are a constant and a spatially correlated term. The method of ordinary least squares would cause inefficient results in such a specification, but estimation using the method of maximum likelihood overcomes this problem.
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Notes
- 1.
In principle, there is also the “bishop” case, where vertices count as borders, but common edges do not. This third case, however, is almost never applied in empirical research.
- 2.
This concept is usually referred to as concept of k-nearest neighbours.
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Sardadvar, S. (2011). Spatial Econometric Specification and Estimation. In: Economic Growth in the Regions of Europe. Contributions to Economics, vol 1. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2637-1_10
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DOI: https://doi.org/10.1007/978-3-7908-2637-1_10
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