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Transitions at Different Moments in Time: A Spatial Probit Approach

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  • J. Paul Elhorst
  • Pim Heijnen
  • Anna Samarina
  • Jan P. A. M. Jacobs

Abstract

This paper adopts a spatial probit approach to explain interaction effects among cross‐sectional units when the dependent variable takes the form of a binary response variable and transitions from state 0 to 1 occur at different moments in time. The model has two spatially lagged variables: one for units that are still in state 0 and one for units that had already transferred to state 1. The parameters are estimated on observations for those units that are still in state 0 at the start of the different time periods, whereas observations on units after they transferred to state 1 are discarded, just as in the literature on duration modeling. Furthermore, neighboring units that had not yet transferred may have a different impact from units that had already transferred. We illustrate our approach with an empirical study of the adoption of inflation targeting for a sample of 58 countries over the period 1985–2008. Copyright © 2016 John Wiley & Sons, Ltd.

Suggested Citation

  • J. Paul Elhorst & Pim Heijnen & Anna Samarina & Jan P. A. M. Jacobs, 2017. "Transitions at Different Moments in Time: A Spatial Probit Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(2), pages 422-439, March.
    • Handle: RePEc:wly:japmet:v:32:y:2017:i:2:p:422-439
    DOI: 10.1002/jae.2505
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