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The Biggest Myth in Spatial Econometrics

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  • James P. LeSage

    (Department of Finance and Economics, McCoy College of Business Administration, Texas State University, 601 University Drive, San Marcos, TX 78666, USA)

  • R. Kelley Pace

    (Department of Finance, E.J. Ourso College of Business Administration, Louisiana State University, Baton Rouge, LA 70803, USA)

Abstract

There is near universal agreement that estimates and inferences from spatial regression models are sensitive to particular specifications used for the spatial weight structure in these models. We find little theoretical basis for this commonly held belief, if estimates and inferences are based on the true partial derivatives for a well-specified spatial regression model. We conclude that this myth may have arisen from past applied work that incorrectly interpreted the model coefficients as if they were partial derivatives, or from use of misspecified models.

Suggested Citation

  • James P. LeSage & R. Kelley Pace, 2014. "The Biggest Myth in Spatial Econometrics," Econometrics, MDPI, vol. 2(4), pages 1-33, December.
  • Handle: RePEc:gam:jecnmx:v:2:y:2014:i:4:p:217-249:d:43830
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    References listed on IDEAS

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