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The Origins of Spatial Interaction

  • Wolfgang Keller
  • Carol H. Shiue

Geography shapes economic outcomes in a major way. This paper uses spatial empirical methods to detect and analyze trade patterns in a historical data set on Chinese rice prices. Our results suggest that spatial features were important for the expansion of interregional trade. Geography dictates, first, over what distances trade was possible in different regions, because the costs of ship transport were considerably below those for land transport. Spatial features also influence the direction in which a trading network is expanding. Moreover, our analysis captures the impact of new trade routes both within and outside the trading areas. We also discuss the long-run implications this might have.

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File URL: http://www.nber.org/papers/w10069.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10069.

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Date of creation: Nov 2003
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Publication status: published as Keller, Wolfgang & Shiue, Carol H., 2007. "The origin of spatial interaction," Journal of Econometrics, Elsevier, vol. 140(1), pages 304-332, September.
Handle: RePEc:nbr:nberwo:10069
Note: DAE ITI
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  1. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
  2. 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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  11. Case, Anne C, 1991. "Spatial Patterns in Household Demand," Econometrica, Econometric Society, vol. 59(4), pages 953-65, July.
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  15. Krugman, Paul, 1991. "History versus Expectations," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 651-67, May.
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  18. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  19. Quah, Danny, 2002. "Spatial Agglomeration Dynamics," CEPR Discussion Papers 3208, C.E.P.R. Discussion Papers.
  20. Anselin, Luc, 2002. "Under the hood Issues in the specification and interpretation of spatial regression models," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 27(3), November.
  21. Danny Quah, 2002. "Spatial agglomeration dynamics," LSE Research Online Documents on Economics 2042, London School of Economics and Political Science, LSE Library.
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  26. Gordon H. Hanson, 2000. "Scale Economies and the Geographic Concentration of Industry," NBER Working Papers 8013, National Bureau of Economic Research, Inc.
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  29. repec:rus:hseeco:121700 is not listed on IDEAS
  30. Carol H. Shiue, 2002. "Transport Costs and the Geography of Arbitrage in Eighteenth-Century China," American Economic Review, American Economic Association, vol. 92(5), pages 1406-1419, December.
  31. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December.
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