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Penalized quadratic inference functions estimation of fixed effects partially linear varying coefficient spatial error model

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  • Chen, Jianbao
  • Li, Fen

Abstract

This study introduces a novel fixed effects partially linear varying coefficient spatial error model featuring a correlation structure within individuals. A penalized quadratic inference functions estimation method for unknowns is proposed by employing B-spline to approximate the varying coefficient functions. Under certain regular conditions, the consistency and asymptotic normality of parametric estimators and the optimal convergence rate of nonparametric estimators are derived. Monte Carlo simulation indicates that the estimates perform strongly in finite sample scenarios. Empirical data analysis demonstrates that the model effectively captures the spatial error correlation of CO2 emissions and diverse factors’ linear and nonlinear influences on CO2 emissions. The proposed model and estimation method can be useful for researchers in related disciplines.

Suggested Citation

  • Chen, Jianbao & Li, Fen, 2025. "Penalized quadratic inference functions estimation of fixed effects partially linear varying coefficient spatial error model," Economic Modelling, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:ecmode:v:146:y:2025:i:c:s0264999325000173
    DOI: 10.1016/j.econmod.2025.107022
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    More about this item

    Keywords

    Partially linear varying coefficient spatial error model; Penalized quadratic inference functions estimation; Correlation within individuals; Asymptotic property; Monte Carlo simulation;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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