Spatial Econometrics: A Broad View

Spatial econometrics can be defined in a narrow and in a broader sense. In a narrow sense it refers to methods and techniques for the analysis of regression models using data observed within discrete portions of space such as countries or regions. In a broader sense it is inclusive of the models and theoretical instruments of spatial statistics and spatial data analysis to analyze various economic effects such as externalities, interactions, spatial concentration and many others. Indeed, the reference methodology for spatial econometrics lies on the advances in spatial statistics where it is customary to distinguish between different typologies of data that can be encountered in empirical cases and that require different modelling strategies. A first distinction is between continuous spatial data and data observed on a discrete space. Continuous spatial data are very common in many scientific disciplines (such as physics and environmental sciences), but are still not currently considered in the spatial econometrics literature. Discrete spatial data can take the form of points, lines and polygons. Point data refer to the position of the single economic agent observed at an individual level. Lines in space take the form of interactions between two spatial locations such as flows of goods, individuals and information. Finally data observed within polygons can take the form of predefined irregular portions of space, usually administrative partitions such as countries, regions or counties within one country.