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Local and regional spatial interactions of Norwegian farm growth

Author

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  • Storm, Hugo
  • Heckelei, Thomas

Abstract

A major challenge in the analysis of micro level spatial interaction is to distinguish actual interactions from the effects of spatially correlated omitted variables. We approach this problem by considering a spatially lagged explanatory model (SLX) employing two spatial weighting matrices differentiating between local and regional neighbourhoods. We empirically analyse spatial interaction between individual farms in Norway and additionally perform Monte Carlo simulations exploring the model’s performance under different data settings. Results show that including two spatial weighting matrices can indeed reduce the bias resulting from omitted variables. In the empirical application, it allows identifying different significant interaction effects.

Suggested Citation

  • Storm, Hugo & Heckelei, Thomas, 2016. "Local and regional spatial interactions of Norwegian farm growth," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235576, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:235576
    DOI: 10.22004/ag.econ.235576
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    Keywords

    Agricultural and Food Policy; Land Economics/Use; Research Methods/ Statistical Methods;
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