J. Paul Elhorst

University of Groningen | RUG · Department of Economics, Econometrics and Finance

Spatial econometric models allow for interactions among cross-sectional units through spatial weight matrices. This paper parameterizes each spatial weight matrix in the widely used spatial Durbin model with a different instead of one common distance decay parameter, using negative exponential and inverse distance matrices. We propose a joint estim...

This paper quantifies and graphically illustrates the distance decay effect and spatial reach of spillover effects derived from a spatial Durbin (SD) model with parameterized spatial weight matrices. Building on attributes of the concept of spatial autocorrelation developed by Arthur Getis, we adopt a distance-based negative exponential spatial wei...

This paper advocates the wider use of the spatial autoregressive (AR) panel data model with spatial moving average (MA) errors, individual and time effects, and different spatial weight matrices for each spatial lag. We demonstrate the practical relevance of this model, derive and investigate the asymptotic properties of a simple quasi maximum like...

This editorial summarizes the papers in issue 18(2) (2023). The first paper extends the Solow–Swan growth model with spatial dependence, pollution and time delay. The second paper investigates the (mis)match between relative factor costs and the output elasticities of production factors due to innovations in the European Union’s Smart Specialisatio...

The article assesses the competitiveness of tourist destinations, while accounting for spatial features of tourism and information on both the origin and the destination of tourists. Using a dynamic spatial panel data model with common factors within the origin‐destination framework, it explores unilateral inbound tourism flows in 110 Italian regio...

This paper contributes to the existing literature on the explanation of housing prices. First, our proposed methodology accounts for cross-sectional dependence, both locally and globally, using individual data of more than 200,000 transactions in the three most northern provinces of the Netherlands over the period 1993–2014. Second, the selection o...

This editorial summarizes the papers in issue 18(1) (2023). The first paper sets out a game-theoretic duopolistic spatial model to investigate whether online retailing causes more transportation-related emissions than offline retailing. The second paper proposes a methodology for statistically downscaling projected gross domestic product (GDP). The...

In 2011, Fogli and Veldkamp adopted a time–space recursive spatial econometric model to investigate whether the female labour force participation rate varies with past participation rates in their own and in contiguous US counties, based on decennial data over the period 1940–2000, but their results are problematic. The applied estimators are diffe...

This editorial summarizes the papers in issue 17(4) (2022). The first paper combines input–output modelling with priority weighting to analyse supply-chain impacts of disasters. The second paper examines skill-based functional specialization of value chains in Brazil using interregional and international value-added measures. The third paper questi...

This editorial summarizes the papers published in issue 17(3) (2022). The first paper analyses the impact of knowledge spillovers on patent applications using a Tobit model. The second paper sets out an economic-theoretical model of industrial specialization patterns across cities and their impact on the spatial agglomeration of skilled workers and...

This editorial summarizes the papers published in issue 17(2) (2022). The first paper evaluates logistic regression and machine-learning methods for predicting firm bankruptcy. The second paper demonstrates that machine learning outperforms existing tools to improve the estimation of regional input–output tables. The third paper investigates whethe...

This editorial summarizes the papers published in issue 17(1) (2022). This issue begins with a second editorial calling on researchers to publish replication results from previous studies. The first paper applies a spatiotemporal Bayesian hierarchical model for understanding the dynamics of second home ownership in Corsica. The second paper determi...

The dynamic general nesting spatial econometric model for spatial panels with common factors is the most advanced model currently available. It accounts for local spatial dependence by means of an endogenous spatial lag, exogenous spatial lags, and a spatial lag in the error term. It accounts for dynamic effects by means of the dependent variable l...

A system of two dynamic spatial panel data model equations is developed in which output growth and the change in the unemployment rate are interdependent. The parameters of the model are estimated by recently developed maximum likelihood techniques for multivariate spatial econometric models, using data of twelve provinces in the Netherlands over t...

This editorial summarizes the papers published in issue 16(4) (2021). The first paper adopts a higher order spatial autoregressive model with endogenous spatial weight matrices. The second paper investigates the existence of the law of one price using regional observations over time. The third paper develops an economic-theoretical model that goes...

This editorial summarizes the papers published in issue 16(3) (2021) in order to raise the bar in applied spatial economic research and highlight new trends and knowledge. The first paper analyses the economic consequences of the rise and spread of the Covid-19 virus in the Brazilian state of São Paulo. The second paper presents a multi-regional ge...

This paper sets out a general framework for store sales evaluation and prediction. The sales of a retail chain with multiple stores are first decomposed into five components, and then each component is explained by store, competitor and consumer characteristics using random effects models for components observable at the store level and spatial err...

Prior research demonstrated that, when a strict evaluation sequence is present in innovation contests, the score of the previously evaluated proposal negatively influences the scoring of a subsequent proposal. In this paper, we expand our understanding of such negative scoring spillovers by analysing a setting where not only the previously evaluate...

This virtual special issue marks International Women's Day 2021 by drawing together 15 papers published in Spatial Economic Analysis over the past decade by female authors and co-authors. It highlights the wide range of ground-breaking research by these authors and their collaborators, growth of female-authored publications over time, as well as th...

This editorial summarises the papers published in issue 15.4 in order to raise the bar in applied spatial economic research and highlight new trends and knowledge. The first paper challenges the standard notion that more growth is better. The second paper challenges macroeconomic models by looking at them from a regional micro-grounded lens, where...

To enhance the measurement of economic and financial spillovers, we bring together the spatial and global vector autoregressive (GVAR) classes of econometric models by providing a detailed methodological review where they meet in terms of structure, interpretation, and estimation. We discuss the structure of connectivity (weight) matrices used by t...

This editorial summarizes the papers published in issue 15(2) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper combines a conditionally autoregressive process from the spatial statistics literature with a spatial Durbin error model from the spatial econometrics literature. The second paper feeds...

This paper adopts a dynamic general nesting spatial panel data model with common factors to explore the effect of population density, real household income per capita, car fleet per capita, and real price of gasoline on departmental traffic per light vehicle in France over the period 1990–2009. Spatial heterogeneity is modeled by a translog functio...

In addition to the three special issue papers, issue 15.1 contains two papers on input-output analysis. The first paper provides a thorough analysis of the cross entropy (CE) method to build input-output tables at sub-territorial levels or to update them in time. The second paper proposes a spatial input-output location quotient accounting for the...

This editorial summarises the papers published in issue 14(4) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper analyses the impact of re-exports on bilateral trade data. The second paper proposes a new measure for the popular smart specialisation index (S3). The third paper proposes a new solutio...

This editorial summarizes the papers published in issue 14(2) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper deals with past and current challenges for regional science research. The second paper investigates whether people living in deprived neighbourhoods have less chance of succeeding in a j...

This editorial summarizes the papers published in issue 14(1) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper applies the Shapley-based decomposition approach to determine the impact of firm-, linkage- and location-specific factors to the survival probability of enterprises. The second paper app...

This virtual special issue of Spatial Economic Analysis marks the keynote lecture by Professor Sergio Rey of the University of California – Riverside at the 58th Annual Congress of the European Regional Science Association in Cork, Ireland. It draws together nine papers from previous issues of the journal that deal with regional and spatial inequal...

This editorial summarizes the papers published in issue 13(4) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper develops an economic geography model with trade costs in all sectors and different shares of unskilled labour in all locations. The second paper translates an economic geography model in...

Purpose The purpose of this paper is to present a theoretical model, which is aggregated across individuals to analyse the labour force participation rate, and empirical results to provide evidence of a U-shaped relationship between women’s labour force participation and economic development. Design/methodology/approach The U-shaped relationship...

We investigate the propagation of financial turbulence via trade, capital flows, and distance channels in the pre-crisis and Global Financial Crisis periods by modeling spillover and interdependence effects, using spatial econometric techniques. Financial turbulence is proxied by the ratio of nonperforming loans to total loans in a country. Spillov...

This editorial summarizes the papers published in issue 13(3) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper challenges the home market hypothesis that large countries host more firms relative to their size than small countries by considering the lobbying activities of multinational firms. The...

The diffusion of a novel taxing scheme (among Dutch municipalities over the period 1998–2005) is studied in which the waste disposal tax is increasing in the amount of waste a household produces. Inspection of the rise and spread of this tax shows that it is contagious: the probability of introduction is increasing in the number of neighboring muni...

This editorial summarises the papers published in issue 13.1 so as to raise the bar in applied spatial economic research and highlight new trends. The first paper adopts a scale neutral approach to investigate the spatial mechanisms that cause regional innovation and growth. The second paper claims that population-weighting when calculating indices...

Raising the bar (6). Spatial Economic Analysis. This editorial summarizes and comments on the papers published in issue 12(4) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper addresses the question of whether ‘jobs follow people’ or ‘people follow jobs’. The second paper develops a new methodolog...

Using the latest spatial econometric techniques and data pertaining to 144 countries over the period 1993–2007, this article tests and compares four frequently used spatial econometric models and eight matrices describing the mutual relationships among the countries, all within a common framework, which helps clarify the impact of neighboring count...

Since the turn of the century, the interest for spatial models in marketing science has increased significantly. An econometric model becomes spatial if the behavior of one economic agent is codetermined by the dependent variable, the explanatory variables, and/or the error term observed on other economic agents, known as respectively the spatially...

This virtual special issue of Spatial Economic Analysis marks the keynote lecture at the 47th Annual Conference of the Regional Science Association International – British and Irish Section in Harrogate by Professor Bob Stimson of the University of Queensland, Australia. With over half the world’s population now living in urban areas, which accordi...

This paper adopts a dynamic spatial panel data model with common factors to explain the non-stationary diffusion process of cigarette consumption across 69 Italian provinces over the period 1877-1913. The CD-test of Pesaran (2015a), the exponent �-test of Bailey et al. (2015), the crosssectionally augmented panel unit root test of Pesaran et al. (2...

Raising the bar (5). Spatial Economic Analysis. This editorial summarizes and comments on the papers published in this issue 12(1) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper examines the impact of the level of education on the decision to migrate and finds that it is approximately twice as...

This paper tests the feasibility and empirical implications of a spatial econometric model with a full set of interaction effects and weight matrix defined as an equally weighted group interaction matrix applied to research productivity of individuals. We also elaborate two extensions of this model, namely with group fixed effects and with heterosk...

Although there is an abundant regional labour market literature taking a spatial perspective, only a few studies have explored extending the analysis of labour force participation with spatial effects. This paper revisits this important issue, proposing a time–space recursive modelling approach that builds on and appraises Fogli and Veldkamp’s meth...

This editorial summarizes and comments on the papers published in issue 11(4) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper deals with common factors and spatial dependence in the error term specification of a production function model. The second paper sets forth a New Economic Geography (NEG...

This editorial introduces a virtual special issue of Spatial Economic Analysis compiled to mark the keynote lecture at the 46th Annual Conference of the Regional Science Association International—British and Irish Section in Cornwall by Professor Jacques Poot of the National Institute of Demographic and Economic Analysis, University of Waikato. Pro...

This editorial summarizes and comments on the papers published in issue 11(3) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper proposes spatial and a-spatial indicators to describe the networks of airline companies around the world. The second paper sets forth a two-regime gravity-type model with...

Regional unemployment rates tend to be strongly correlated over time, parallel the national unemployment rate, and be correlated across space. We address these key stylized facts by linking different strands of literature into a unified methodology to investigate regional unemployment disparities. This methodology simultaneously accounts for serial...

Using Bayesian posterior model probabilities and data pertaining to 3659 Brazilian minimum comparable areas (MCAs) over the period 1970–2010, two theoretical settings of population growth dynamics resulting in two spatial econometric specifications in combination with a wide range of potential neighbourhood matrices are tested against each other. T...

In this editorial we summarise and comment on the papers published in issue 11.2 so as to raise the bar in applied spatial economic research and highlight new trends. The first paper analyses which regions in Europe were resilient to the great Recession and which ones were not. The second and the third develop a competing-destinations gravity model...

In this editorial, we summarize and comment on the papers published in issue 11.1 so as to raise the bar in applied spatial economic research and highlight new trends. The first paper employs the J-test to discriminate between two economic-theoretical explanations for the wage curve. The second applies a two-step ML procedure to measure the impact...

This paper adopts a dynamic spatial panel data model with common factors to explain the non-stationary diffusion process of cigarette consumption across 69 Italian provinces over the period 1877-1913. The Pesaran (2015) CD-test and the exponent a-test of Bailey et al. (2015) are used to show that both weak and strong cross-sectional dependence are...

In the last decade, inclusive growth, a broader concept of economic growth came into vogue among international organizations and countries' policy makers. This paper reviews recent studies on inclusive growth addressing the following issues: which indicators have been considered, how they have been combined, and to which extent can existing researc...

We provide a comprehensive overview of the strengths and weaknesses of different spatial econometric model specifications in terms of spillover effects. Based on this overview, we advocate taking the SLX model as point of departure in case a well-founded theory indicating which model is most appropriate is lacking. In contrast to other spatial econ...

This chapter gives an overview of all linear spatial econometric models with different combinations of interaction effects that can be considered, as well as the relationships between them. It also provides a detailed overview of the direct and indirect effects estimates that can be derived from these models. In addition, it critically discusses th...

This chapter introduces the topics the book will be dealing with.

Despite the prevalence of both competitive forces and patterns of collaboration within academic communities, studies on research productivity generally treat universities as independent entities. By exploring the research productivity of all academic economists employed at 81 universities and 17 economic research institutes in A ustria, G ermany, a...

Different fundamental methodological spatial econometric issues are discussed not yet addressed by the existent empirical literature on FDI and third country effects that explains why it has failed to find results consistent with formal theory. This is demonstrated by taking the baseline spatial econometric model developed by Blonigen et al. (Eur E...

A hybrid new Keynesian Phillips curve is estimated with spatial interaction effects among the dependent and the independent variables using data of 67 provinces across Turkey over the period 1987–2001. In contrast to previous studies, backward-looking behavior appears to be more or equally important than forward looking behavior. Furthermore, when...

This paper provides a survey of the existing literature on spatial panel data models. Both static and dynamic models will be considered. The paper also demonstrates that spatial econometric models that include lags of the dependent variable and of the independent variables in both space and time provide a useful tool to quantify the magnitude of di...

Using data from Abiad et al. (2008), we estimate a dynamic spatial panel data model with country and time-period fixed effects to test for spatial cointegration in the financial liberalization index. Parameter estimates are obtained by reformulating the model in spatial first-differences. Next, by considering the error correction model representati...

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...

This paper extends the seminal Blanchard and Katz regional labour market model to include interaction effects using a dynamic spatial panel data approach. Three key contributions of this extended model are: (i) the unrealistic assumption that regions are independent of one another no longer has to be made, (ii) the magnitude and significance of so-...

Regional Studies. This study investigates the causes of variation in regional unemployment rates from a cross-country perspective. In the proposed, stylized theoretical framework, both regional- and national-level variables serve as explanatory variables. An econometric model of random and fixed coefficients of regional and national variables ackno...

Elhorst (2003, 2010a) provides Matlab routines to estimate spatial panel data models at his Web site. This paper extends these routines to include the bias correction procedure proposed by Lee and Yu (2010a) if the spatial panel data model contain spatial and/or time-period fixed effects, the direct and indirect effects estimates of the explanatory...

Using new data on financial liberalization taken from Abiad et al. (2008, IMF Working Papers, No. 08/266) for 62 countries over the period 1975—2005, we show that some of the main findings of Huang's (2009, Journal of Applied Econometrics 24: 1207—1213) replication study on the drivers of financial liberalization are not robust. Major changes conce...

Higher-order spatial econometric models that include more than one weights matrix have seen increasing use in the spatial econometrics literature. There are two distinct issues related to the specification of these extended models. The first issue is what form the higher-order spatial econometric model takes, i.e. higher-order polynomials in the sp...

This paper provides a survey of the existing literature on the specification and estimation of dynamic spatial panel data models, a collection of models for spatial panels extended to include one or more of the following variables and/or error terms: a dependent variable lagged in time, a dependent variable lagged in space, a dependent variable lag...

ABSTRACT Existing studies of fiscal policy interactions are based on single equation (SE) models of either taxation or expenditures, without specifying the underlying social welfare function, without taking account of budget constraints and without allowing for cost differences between jurisdictions. Taking all this into account, we derive an exten...

China's position in the world economy during the past half-century provides vital information for investigating the relation between politics and trade. Although there is a substantial number of studies in this area, the current study extends the literature in at least three ways: (1) it is one of the first studies that investigates the problem of...

In recent years, the spatial econometrics literature has exhibited a growing interest in the specification and estimation of econometric relationships based on spatial panels. Spatial panels typically refer to data containing time series observations of a number of spatial units (zip codes, municipalities, regions, states, jurisdictions, countries,...

The authors of this paper adopt a Solow–Swan model extended to include demographic variables to analyze the overall effect of demographic transition on economic growth. The results, based on data from seventy countries over the period 1961–2003, reveal that GDP per capita growth is positively related to the growth differential between the working-a...

This paper compares the performance, measured in terms of bias, root mean squared error and computation time, of different estimators of the fixed effects dynamic panel data model extended to include endogenous interaction effects when T is small: (i) the bias corrected LSDV (BCLSDV) estimator based on Yu, De Jong and Lee (2008); (ii) the ML estima...

One of the main questions for politicians is how to introduce more flexibility in the labour market while still providing employees with ample social security. The concept of flexicurity has sprung to attention through its success in Denmark. This paper explores whether the Danish model can also be successful in other European countries. A simultan...

Studies on governance generally ignore spatial dependence among the observations. Employing spatial econometric methods, we find that governance in one country exhibits a positive relationship with governance in neighbouring countries. Consequently, a change in a single explanatory variable in a particular country not only affects the level of gove...

The goal of this article is to test four distinct hypotheses about whether the relative location of an economy affects economic growth and economic well-being using an extended Solow–Swan neoclassical growth model that incorporates both space and time dynamics. We show that the econometric specification takes the form of an unconstrained spatial Du...

This paper places the key issues and implications of the new ‘introductory’ book on spatial econometrics by James LeSage & Kelley Pace (2009) in a broader perspective: the argument in favour of the spatial Durbin model, the use of indirect effects as a more valid basis for testing whether spatial spillovers are significant, the use of Bayesian post...

ABSTRACT This research proposes a two-regime spatial Durbin model with spatial and time-period fixed effects to test for political yardstick competition and exclude any other explanation that might produce spatial interaction effects among the dependent variable, the independent variables, or the error term. The study also derives the maximum likel...

We use Geographic Information Systems (GIS) to analyze the relationship between the biological standard of living and the development of the transport network in 90 municipalities located in the rural provinces of Groningen and Drenthe, the Netherlands, in the historical context of the 19th century. By running advanced spatiotemporal models, we fin...

This paper demonstrates that jointly modeling serial and spatial error correlation results in a trade-off between the serial and spatial autocorrelation coefficients. Ignoring this trade-off causes inefficiency and may lead to nonstationarity.

This article evaluates a new mode of high speed ground transportation, the magnetic levitation rail system (Maglev). The outcomes of this evaluation provide policy information on the interregional redistribution of employment and population and the national welfare improvement of two Dutch urban-conglomeration and two Dutch core-periphery projects....

This article reviews the methodology of 17 empirical studies in which the participation rate has been estimated with the help of regional data. After defining and pointing out the orientation of regional labour market research on participation rates, three methodological issues dominate the discussion and eventually the conclusions: the extent to w...

This study investigates the causes of variation in age-specific male and female labour force participation rates using annual data from 154 regions across ten European Union member states for the period 1983–1997. Regional participation rates appear to be strongly correlated in time, weakly correlated in space and to parallel their national counter...