Heterogeneous spillovers among Spanish provinces: A generalized spatial stochastic frontier model

This paper introduces new spatial stochastic frontier models to examine Spanish provinces’ efficiency and its evolution over the period 2000-2013. We use a heteroscedastic version of the spatial stochastic frontier models introduced by Glass et al. (2016) that, in addition, allows us to identify the determinants of the spatial dependence among provinces. We contribute to the heterogeneous spatial models that have been introduced in recent years, such as Aquaro et al. (2015) and LeSage and Chih (2016) allowing measures of spatial dependence specific to each observation. This feature of the model lets us rank all Spanish provinces in accordance with their degree of spatial dependence, information that will aid policymakers to better allocate public resources between provinces. The period examined is of special interest given that it coincides with a break in the economic growth tendency, which leads to a deterioration in Spain´s economic situation.