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Alternative Approaches to Spatial Autocorrelation: An Improvement Over Current Practice

Author

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  • Swarnjit S. Arora

    (Department of Economics University of Wisconsin-Milwaukee Milwaukee, Wisconsin 53201 U.S.A.)

  • Murray Brown

    (Department of Economics State University of New York at Buffalo Buffalo, New York 14260 U.S.A.)

Abstract

THE ASSUMPTION THAT THE CORRELATION BETWEEN THE TEMPORAL ERROR TERMS ∈ t AND ∈ t-n DECLINES AS n INCREASES CAN BE JUSTIFIED BY APPEALING TO FIRST OR SECOND ORDER MAR-KOV PROCESSES OR TO SPECTRAL ANALYSIS, BUT A SIMILAR ASSUMPTION CANNOT BE JUSTIFIED FOR SPATIAL ERROR TERMS. THIS INTRODUCES AMBIGUITY IN THE SPECIFICATION OF THE WEIGHTING MATRIX W. IN THIS PAPER WE PROPOSE THE JOINT GENERALIZED LEAST SQUARES, EQUICORRELATED ERROR TERMS, RANDOM ERROR COMPONENT MODELS, AND RANDOM COEFFICIENT REGRESSION MODELS AS ALTERNATIVE SOLUTIONS. THESE APPROACHES ARE SUBJECT TO FEW OR NO PERSONAL BIASES, YET THEY ARE ABLE TO RESOLVE THE PROBLEM OF SPATIAL AUTOCORRELATION.

Suggested Citation

  • Swarnjit S. Arora & Murray Brown, 1977. "Alternative Approaches to Spatial Autocorrelation: An Improvement Over Current Practice," International Regional Science Review, , vol. 2(1), pages 67-78, October.
    • Handle: RePEc:sae:inrsre:v:2:y:1977:i:1:p:67-78
    DOI: 10.1177/016001767700200105
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    References listed on IDEAS

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    Cited by:

    1. Thomas Y. Mathä & Allison Shwachman Kaminaga, 2017. "Regional wages and market potential in the enlarged EU: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 49(4), pages 376-385, January.
    2. Jesús Mur & Fernando López & Marcos Herrera, 2010. "Testing for Spatial Effects in Seemingly Unrelated Regressions," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(4), pages 399-440.
    3. Luc Anselin, 2010. "Thirty years of spatial econometrics," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 3-25, March.
    4. Julie Le Gallo, 2000. "Spatial econometrics (1, Spatial autocorrelation) [Econométrie spatiale (1, Autocorrélation spatiale)]," Working Papers hal-01527290, HAL.
    5. Kelejian, Harry H. & Robinson, Dennis P., 1992. "Spatial autocorrelation : A new computationally simple test with an application to per capita county police expenditures," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 317-331, September.

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