Spatial spillovers in the development of institutions
AbstractWe examine spatial spillovers in institutional development. Dependent variables are institutional measures reflecting politics, law, and governmental administration. The explanatory variable of interest is the level of institutions in bordering countries—a spatial lag of the dependent variable. Our spatial model directly leads to the identification strategy for the endogenous spatial lag. We implement new results in spatial econometrics to counter missing-data problems usually rife in spatial empirics. Spatial institutional spillovers are statistically significant and economically important. A counter-factual exercise – the non-existence of the USSR – reveals large direct and indirect spillovers. Numerous robustness exercises bolster conclusions, including yearly cross-section regressions, fixed effects estimates, and adding many extra explanatory variables. Moreover, we provide a new theoretical result showing the robustness of estimates in the presence of omitted variables. We extend the core model, allowing different effects for better and worse neighbors, using inverse distance weights, estimating the spatial-Durbin model, and using Polity's institutional measure.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 101 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/devec
Institutions; Spatial econometrics; Governance; Neighborhood effects; Spatial spillovers;
Other versions of this item:
- Harry Kelejian & Peter Murrell & Oleksandr Shepotylo, 2007. "Spatial Spillovers in the Development of Institutions," Electronic Working Papers 07-001, University of Maryland, Department of Economics.
- C5 - Mathematical and Quantitative Methods - - Econometric Modeling
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
- P5 - Economic Systems - - Comparative Economic Systems
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