Mostly Pointless Spatial Econometrics?

20 Pages Posted: 21 Apr 2012

See all articles by Stephen Gibbons

Stephen Gibbons

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)

Date Written: May 2012

Abstract

We argue that identification problems bedevil applied spatial economic research. Spatial econometrics usually solves these problems by deriving estimators assuming that functional forms are known and by using model comparison techniques to let the data choose between competing specifications. We argue that in many situations of interest this achieves, at best, only very weak identification. Worse, in many cases, such an approach will be uninformative about the causal economic processes at work, rendering much applied spatial econometric research “pointless,” unless the main aim is description of the data. We advocate an alternative approach based on the “experimentalist paradigm” which puts issues of identification and causality at center stage.

Suggested Citation

Gibbons, Stephen and Overman, Henry G., Mostly Pointless Spatial Econometrics? (May 2012). Journal of Regional Science, Vol. 52, Issue 2, pp. 172-191, 2012, Available at SSRN: https://ssrn.com/abstract=2043394 or http://dx.doi.org/10.1111/j.1467-9787.2012.00760.x

Stephen Gibbons

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
[44] (0)20 7955 6245 (Phone)
[44] (0)20 7955 7773 (Fax)

HOME PAGE: http://www.lse.ac.uk/people/s.gibbons@lse.ac.uk/

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 20 7955 6581 (Phone)
+44 20 7955 7412 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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