Spatial Growth Regressions: Model Specification, Estimation and Interpretation

51 Pages Posted: 18 Apr 2007

See all articles by James P. LeSage

James P. LeSage

Texas State University - McCoy College of Business Administration

Manfred M. Fischer

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics

Date Written: April 17, 2007

Abstract

This paper uses Bayesian model comparison methods to simultaneously specify both the spatial weight structure and explanatory variables for a spatial growth regression involving 255 NUTS 2 regions across 25 European countries. In addition, a correct interpretation of the spatial regression parameter estimates that takes into account the simultaneous feedback nature of the spatial autoregressive model is provided. Our findings indicate that incorporating model uncertainty in conjunction with appropriate parameter interpretation decreased the importance of explanatory variables traditionally thought to exert an important influence on regional income growth rates.

Keywords: model uncertainty, Bayesian model averaging, spatial weight structures

JEL Classification: C11, C21, O47, O52, R11

Suggested Citation

LeSage, James P. and Fischer, Manfred M., Spatial Growth Regressions: Model Specification, Estimation and Interpretation (April 17, 2007). Available at SSRN: https://ssrn.com/abstract=980965 or http://dx.doi.org/10.2139/ssrn.980965

James P. LeSage (Contact Author)

Texas State University - McCoy College of Business Administration ( email )

Finanace and Economics Department
601 University Drive
San Marcos, TX 78666
United States
512-245-0256 (Phone)
512-245-3089 (Fax)

HOME PAGE: http://www.spatial-econometrics.com

Manfred M. Fischer

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics ( email )

Welthandelsplatz 1, D4
Vienna, 1020
Austria

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