Preface ....................................................... vii
Foreword ....................................................... ix
1. Econometrics for Spatial Models: Recent Advances ............. 1
Luc Anselin, Raymond J.G.M.Florax, Sergio J.Rey
1.1. Introduction ............................................ 1
1.2. Recent Advances ......................................... 2
1.3. Specification, Testing and Estimation .................. 11
1.4. Discrete Choice, Nonparametric and Bayesian
Approaches ............................................. 14
1.5. Spatial Externalities .................................. 18
1.6. Urban Growth and Agglomeration Economies ............... 20
1.7. Trade and Economic Growth .............................. 22
1.8. Future Directions ...................................... 24
Part I. Specification, Testing and Estimation
2. The Performance of Diagnostic Tests for Spatial
Dependence in Linear Regression Models:
A Meta-Analysis of Simulation Studies ....................... 29
Raymond J.G.M.Florax, Thomas de Graaff
2.1. Introduction ........................................... 29
2.2. Meta-Analysis and Response Surfaces .................... 32
2.3. Spatial Dependence Tests and Data Generating
Processes .............................................. 34
2.4. A Taxonomy of Spatial Dependence Tests ................. 40
2.5. Review of the Simulation Literature on Spatial
Dependence Tests ....................................... 41
2.6. Experimental Design and Meta-Regression Results ........ 43
2.7. Conclusions ............................................ 63
3. Moran-Flavored Tests with Nuisance Parameters:
Examples .................................................... 67
Joris Pinkse
3.1. Introduction ........................................... 67
3.2. Test Statistics ........................................ 68
3.3. Weights Matrix ......................................... 69
3.4. Nuisance Parameters .................................... 70
3.5. Conditions ............................................. 74
3.6. Conclusions ............................................ 76
Appendix: Synopsis of Conditions ............................ 77
4. The Influence of Spatially Correlated
Heteroskedasticity on Tests for
Spatial Correlation ......................................... 79
Harry H.Kelejian, Dennis P.Robinson
4.1. Introduction ........................................... 79
4.2. The Model .............................................. 81
4.3. Basic Results .......................................... 87
4.4. Conclusions ............................................ 90
Appendix: Preliminaries and Proofs .......................... 91
5. A Taxonomy of Spatial Econometric Models for
Simultaneous Equations Systems .............................. 99
Sergio J.Rey, Marlon G.Boamet
5.1. Introduction ........................................... 99
5.2. Recent Applications of Spatial Econometrics in a
Multi-Equation Framework ............................... 99
5.3. Taxonomy .............................................. 102
5.4. Estimation Issues ..................................... 105
5.5. Monte Carlo Experiments ............................... 109
5.6. Results ............................................... 1ll
5.7. Conclusions ........................................... 114
6. Exploring Spatial Data Analysis Techniques Using R:
The Case of Observations with No Neighbors ................. 121
Roger S.Bivand, Boris A.Portnov
6.1. Introduction .......................................... 121
6.2. Implementing spatial weights objects in R ............. 122
6.3. Spatial Lags: Consequences of Observations
with No Neighbors ..................................... 125
6.4. Case Study: Clusters of Towns in an Urban
System with Sparsely Populated Regions ................ 129
6.5. Conclusions ........................................... 140
Part II. Discrete Choice and Bayesian Approaches
7. Techniques for Estimating Spatially Dependent
Discrete Choice Models ..................................... 145
Mark M.Fleming
7.1. Introduction .......................................... 145
7.2. Heteroskedastic Estimators ............................ 149
7.3. Full Spatial Information Estimators ................... 151
7.4. Weighted Non-Linear Least Squares Estimators .......... 160
7.5. Conclusions ........................................... 166
8. Probit in a Spatial Context: A Monte Carlo
Analysis ................................................... 169
Kurt J.Beron, Wim P.M.Vijverberg
8.1. Introduction .......................................... 169
8.2. Probit Models ......................................... 170
8.3. The RIS Simulator ..................................... 176
8.4. Monte Carlo Data ...................................... 178
8.5. Monte Carlo Results ................................... 181
8.6. Spatial Linear Probability Model ...................... 187
8.7. Conclusions ........................................... 192
9. Simultaneous Spatial and Functional Form
Transformations ............................................ 197
R.Kelley Pace, Ronald Barry, V.Carlos Slawson Jr.,
C.F.Sirmans
9.1. Introduction .......................................... 197
9.2. Simultaneous Spatial and Variable Transformations ..... 200
9.3. Baton Rouge Housing ................................... 206
9.4. Conclusions ........................................... 213
10.Locally Weighted Maximum Likelihood Estimation:
Monte Carlo Evidence and an Application .................... 225
Daniel P.McMillen, John F.McDonald
10.1.Introduction .......................................... 225
10.2.The Locally Weighted Log-Likelihood Function .......... 226
10.3.Monte Carlo Experiments ............................... 229
10.4.Density Zoning in 1920s Chicago ....................... 232
10.5.Conclusions ........................................... 236
Appendix: Computational Steps for an LWML Model ............ 237
11.A Family of Geographically Weighted Regression
Models ..................................................... 241
James P.LeSage
11.1.Introduction .......................................... 241
11.2.The GWR and Bayesian GWR models ....................... 243
11.3.Estimation of the BGWR model .......................... 246
11.4.Examples .............................................. 253
11.5.Conclusions ........................................... 263
Part III.Spatial Externalities
12.Hedonic Price Functions and Spatial Dependence:
Implications for the Demand for Urban Air Quality .......... 267
Kurt J.Beron, Yaw Hanson, James C.Murdoch,
Mark A.Thayer
12.1.Introduction .......................................... 267
12.2.Hedonic Functions and Benefit Estimation .............. 268
12.3.Econometric Issues .................................... 270
12.4.Estimates ............................................. 271
12.5.Conclusions ........................................... 278
Appendix: Data Sources ..................................... 279
13.Prediction in the Panel Data Model with Spatial
Correlation ................................................ 283
Badi H.Baltagi, Dong Li
13.1.Introduction .......................................... 283
13.2.Estimation ............................................ 284
13.3.Prediction ............................................ 291
13.4.Conclusions ........................................... 295
14.External Effects and Cost of Production .................... 297
Rosina Moreno, Enrique López-Bazo, Esther Vaya,
Manuel Artis
14.1.Introduction .......................................... 297
14.2.Sources of Regional and Industrial Externalities ...... 299
14.3.Theoretical Framework: Duality Theory and
External Effects ...................................... 302
14.4.Spatial and Sectoral Externalities .................... 304
14.5.Data .................................................. 309
14.6.Empirical Results ..................................... 310
14.7.Conclusions ........................................... 316
Part IV.Urban Growth and Agglomeration Economies
15.Identifying Urban-Rural Linkages:
Tests for Spatial Effects in the Carlino-Mills Model ....... 321
Shunting Bao, Mark Henry, David Barkley
15.1.Introduction .......................................... 321
15.2.Spatial Context of the Analysis ....................... 322
15.3.Econometric Model ..................................... 325
15.4.Empirical Results ..................................... 329
15.5.Conclusions ........................................... 333
16.Economic Geography and the Spatial Evolution of
Wages in the
16.United States .............................................. 335
Yannis M.Ioannides
16.1.Introduction .......................................... 335
16.2.Theoretical Strands ................................... 335
16.3.The Model ............................................. 336
16.4.Data .................................................. 343
16.5.Econometric Analysis .................................. 350
16.6.Conclusions ........................................... 357
17.Endogenous Spatial Externalities: Empirical
Evidence and Implications for the Evolution
of Exurban Residential Land Use Patterns ................... 359
Elena Irwin, Nancy Bockstael
17.1.Introduction .......................................... 359
17.2.Spatial Externalities and Residential Location ........ 360
17.3.A Model of Land Use Conversion with Interaction
Effects ............................................... 362
17.4.Estimation of the Empirical Model ..................... 366
17.5.Predicted Patterns of Development ..................... 375
17.6.Conclusions ........................................... 378
Part V.Trade and Economic Growth
18.Does Trade Liberalization Cause a Race-to-the-Bottom
in Environmental Policies? A Spatial Econometric
Analysis ................................................... 383
Paavo Eliste, Per G.Fredriksson
18.1.Introduction .......................................... 383
18.2.Model Specification ................................... 385
18.3.Data Description and Hypothesis Specification ......... 388
18.4.Empirical Results ..................................... 388
18.5.Conclusions ........................................... 395
19.Regional Economic Growth and Convergence:
Insights from a Spatial Econometric Perspective ............ 397
Bernard Fingleton
19.1.Introduction .......................................... 397
19.2.Growth Theory.Overview ................................ 397
19.3.The Single Equation Approach to the Verdoorn Law ...... 401
19.4.A Simultaneous Equation Approach: Problems and
Issues ................................................ 405
19.5.Convergence Theory and Methodology .................... 409
19.6.Empirical Convergence Analysis ........................ 416
19.7.Conclusions ........................................... 425
Appendix: Description of Data .............................. 427
20.Growth and Externalities Across Economies: An
Empirical Analysis Using Spatial Econometrics .............. 433
Esther Vayd, Enrique López-Bazo, Rosina Moreno,
Jordi Surinach
20.1.Introduction .......................................... 433
20.2.Do Spatial Externalities Matter? ...................... 434
20.3.A Simple Growth Model With Spillovers Across
Regions ............................................... 436
20.4.Empirical Specifications .............................. 439
20.5.The Spatial Econometrics of Considering
Externalities Across Economies ........................ 441
20.6.Empirical Evidence .................................... 448
20.7.Conclusions ........................................... 453
References ................................................. 457
Author Index .................................................. 489
Index ......................................................... 499
List of Contributors .......................................... 507
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