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The Analysis of Location, Co-location and Urbanisation Economics

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  • Johansson, Börje

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Forslund, Ulla

    () (JIBS, Jönköping International Business School)

Abstract

Using the taxonomy by Anselin (2003), this paper investigates how the inclusion of spatially discounted variables on the ‘right-hand-side’ (RHS) in empirical spatial models affects the extent of spatial autocorrelation. The basic proposition is that the inclusion of inputs external to the spatial observation in question as a separate variable reveals spatial dependence via the parameter estimate. One of the advantages of this method is that it allows for a direct interpretation. The paper also tests to what extent significance of the estimated parameters of the spatially discounted explanatory variables can be interpreted as evidence of spatial dependence. Additionally, the paper advocates the use of the accessibility concept for spatial weights. Accessibility is related to spatial interaction theory and can be motivated theoretically by adhering to the preference structure in random choice theory. Monte Carlo Simulations show that the coefficient estimates of the accessibility variables are significantly different from zero in the case of modelled effects. The rejection frequency of the three typical tests (Moran’s I, LM-lag and LM-err) is significantly reduced when these additional variables are included in the model. When the coefficient estimates of the accessibility variables are statistically significant, it suggests that problems of spatial autocorrelation are significantly reduced. Significance of the accessibility variables can be interpreted as spatial dependence

Suggested Citation

  • Johansson, Börje & Forslund, Ulla, 2005. "The Analysis of Location, Co-location and Urbanisation Economics," Working Paper Series in Economics and Institutions of Innovation 46, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0046
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    References listed on IDEAS

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    Cited by:

    1. Liargovas, Panagiotis & Daskalopoulou, Irene, 2011. "Capital allocation in the Greek regions," Journal of Policy Modeling, Elsevier, vol. 33(6), pages 866-888.
    2. Börje Johansson & Johan Klaesson, 2011. "Agglomeration dynamics of business services," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(2), pages 373-391, October.
    3. Purwaningrum, Farah & Evers, Hans-Dieter & Ariff Lim, Syamimi & Anthony Banyouko, Ndah, 2014. "The Governance of Knowledge: Perspectives from Brunei Darussalam and Malaysia," MPRA Paper 55170, University Library of Munich, Germany.
    4. Shanzi Ke, 2010. "Agglomeration, productivity, and spatial spillovers across Chinese cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 157-179, August.
    5. Hans Lööf, 2011. "R&D-Persistency, Metropolitan Externalities and Productivity," ERSA conference papers ersa11p1396, European Regional Science Association.

    More about this item

    Keywords

    accessibility; spatial dependence; spatial econometrics; Monte Carlo Simulations; spatial spillovers;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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