Estimation of the spatial weights matrix under structural constraints

Arnab Bhattacharjee, Chris Jensen-Butler

    Research output: Contribution to journalArticle

    38 Citations (Scopus)

    Abstract

    While estimates of models with spatial interaction are very sensitive to the choice of spatial weights, considerable uncertainty surrounds the definition of spatial weights in most studies with cross-section dependence. We show that, in the spatial error model, the spatial weights matrix is only partially identified, and is fully identified under the structural constraint of symmetry. For the spatial error model, we propose a new methodology for estimation of spatial weights under the assumption of symmetric spatial weights, with extensions to other important spatial models. The methodology is applied to regional housing markets in the UK, providing an estimated spatial weights matrix that generates several new hypotheses about the economic and socio-cultural drivers of spatial diffusion in housing demand.
    Original languageEnglish
    Pages (from-to)617-634
    JournalRegional Science and Urban Economics
    Volume43
    Issue number4
    Early online date1 Apr 2013
    DOIs
    Publication statusPublished - Jul 2013

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