Empirical growth models with spatial effects

Abstract

Recent contributions to the regional science literature have considered spatial effects in empirical growth specifications. In the case of spatial dependence, following theoretical arguments from new economic geography, and endogenous growth models, this phenomenon has been associated with the existence of externalities that cross regional borders. However, despite the general consensus that interactions or externalities are likely to be the major source of spatial dependence, they have been modelled in a rather ad hoc manner in most existing empirical studies. In contrast, we advocate basing the analysis on structural growth models which include externalities across economies, applying the appropriate spatial econometrics tools to test for their presence and estimate the magnitude of these externalities in the real world

Evaluating multiple spatial dimensions of economic growth in Brazil using spatial panel data models

“…It is also likely that regions that are geographically close together may experience random shocks that affect both simultaneously. Another explanation is related to unobserved determinants that are correlated across regions (Fingleton and López-Bazo 2006). Possible unobserved determinants of economic growth not considered in these models include cultural, institutional and technological factors, which might be correlated across spatial units.…”

“…Moreover, Fingleton and López-Bazo (2006) note that substantive dependence (spatial lag and/or spatial cross-regressive) assumes that across-region externalities are due to knowledge diffusion and pecuniary externalities. López-Bazo et al (2004) discuss in some detail the substantive arguments for spatial dependence across regions.…”

Regional labour force participation across the European Union: a time–space recursive modelling approach with endogenous regressors

“…This is also reflected in recent studies (shown in Table 1) extending the analysis of participation rates with spatial effects where the focus has been on the SEM or SAR model. 2 Whereas the SEM does not require a theoretical framework which can make it problematic on substantive grounds (Fingleton & Lopez-Bazo, 2006;Franzese & Hays, 2007), an SAR model does and implies that a region's participation rate is directly affected by participation rates in neighbouring regions. As Anselin (2006, p. 6) states, the SAR model is generally conceptualized as representing the empirical counterpart to an equilibrium solution of strategic interaction or a spatial reaction function.…”

Cross-national Neighbouring Effects on European Regional Specialization

“…However, specialization does not present a concrete theoretical ground like convergence equations or Verdoorn's law equations in Fingleton & López-Bazo (2006), to be explicitly approached by means of a spatial lag model. For this reason, our selection should rely on spatial dependence test results.…”