Economic Modelling 29 (2012) 12

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Economic Modelling
journal homepage: www.elsevier.com/locate/ecmod

Frontiers in spatial econometrics modelling

The present issue of Economic Modelling features a selection of papers presented at the 3rd World Conference of the Spatial Econometrics Association, held on July 910, 2009 at the Faculty of Economics and Business, University of Barcelona. The purpose of this meeting was to provide a forum where economists, econometricians, geographers, and regional scientists could discuss the development of theoretical tools and sound applications of the discipline of spatial econometrics. Henry Overman, from the London School of Economics, and James LeSage, from Texas State University, gave the plenary speeches. The scientic contributions to the conference spanned a broad range of topics: ranging from applied to theoretical econometrics. This variety of papers offered an insight into the scope for innovative empirical research across different areas in the eld spatial econometrics, including also spatial statistics and spatial data analysis. The meeting was attended by more than 100 participants from around the world. All of the papers selected for this special issue have gone through the usual process of peer review for Economic Modelling, and we would like to thank all of the referees for their hard work. The variety of the contributions both in terms of the methodological contribution and in terms of the substantive issues tackled provides a good snapshot of the current development of the discipline and of the future paths along which it will develop in future years. Contributions cover both the topic of static spatial econometrics based on synchronic data and that of dynamic modelling based on spatial panel data. This issue contains nine papers. Four of them refer to static spatial econometrics (namely those written by Arbia et al., Seya, et al., Smirnov and Egan and Yokoi and Ando) while the remaining 5 (namely those by Baltagi et al., Bartkowska and Riedl, Cotteleer and Van Kooten, Hall and Guo and Claeys et al.) conversely take an explicit panel data approach. In what follows we briey summarize the content of the various contributions to this special issue. Most of the existing literature in spatial econometrics uses data at aggregate level. The paper by Arbia, Espa, Giuliani and Mazzitelli take a different approach and present a methodology based on micro data referring to single individual economic agents. Following such an approach they treat each rm as a point in the space and present a methodology to analyse the regularities in their arrangement using point pattern techniques. In particular they propose a nonparametric approach for the analysis of spatial heterogeneity, based on the so-called inhomogeneous K-function. They present an empirical application of the method to analyse the spatial distribution of 2654 high-tech manufacturing plants in Italy, for the year 2001. The authors assume the economic space to be non-homogenous, and take the pattern of inhomogeneity as an instrument to disentangle spatial heterogeneity from spatial dependence. Along similar lines, Baltagi, Blien and Wolf study individual data distributed in space and discuss the possibility of a dynamic wage curve
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for Western Germany, using data from a random sample of 974,179 employees observed over the period 19802004, covering 326 NUTS3. Specically, the authors estimate a dynamic wage curve using a two-step approach to account for spatial effects of unemployment across regions on wages. Results conrm the nding of a dynamic wage curve. The wage elasticity with respect to unemployment is relatively small, but signicant, in the short-run, while it is larger in the long-run. As predicted by the theory, wage effects of unemployment seem to be more pronounced for groups with weaker bargaining power. An area that registered a large number of contributions in applied spatial econometrics in the last decades is regional convergence testing. In this eld of research, Bartkowska and Riedl apply a novel regression based convergence test, recently proposed in the literature, to detect clubs of convergence in the set of EU regions. Using a sample of 206 European NUTS2 regions over the years 19902002, the authors show the existence of six convergence clubs across this area, and point at the role of initial conditions in human capital and per capita income as factors explaining to which club a region belongs to. House and land price is also a hot topic in applied spatial econometrics. In their paper Cotteleer and Van Kooten consider the effects of nonmarket amenities in house hedonic prices in Saanich Peninsula, on Vancouver Island, British Columbia (Canada). The data consist of actual transactions and assessments of residential properties for the period 2000 to 2006. The authors compare estimates of different non-market amenity values based on actual transactions and assessed values. They estimate the two models using Seemingly Unrelated Regression and method of moments estimation including explicit consideration of spatial correlation among residuals. Their main conclusion is that the impact of open space on property values is not the same for actual sales and assessed values. An interesting application of panel data modelling is presented in the paper by Hall and Guo, who test the BalassaSamuelson hypothesis in the context of contemporary China using the spatial panel feasible GLS estimator developed by Kapoor et al. (2007). Using a panel of 30 Chinese regions observed over 16 years, the authors nd evidence in favour of the BalassaSamuelson when black market exchange rate is considered as a proxy of real rate. Another application of panel data methods is presented in the paper by Claeys, Moreno, and Suriach who study the crowding out effects of increasing public debt in an empirical framework that accounts for spatial spillovers, resulting from nancial integration. The empirical exercise uses data for both OECD and emerging market economies for the years from 1990 to 2005 and applies test and estimation methods developed to account for spatial dependence in panel data. The main nding is that the crowing out effect is small and that nancial integration implies limited spillover via nancial markets. However, cross border spillover is estimated to be much

Frontiers in spatial econometrics modelling

stronger among OECD countries, and particularly in EU Member States. Emerging markets does not seem to be fully integrated in global markets. Bayesian spatial econometrics has registered several contributions in the last decades. A good example of some the advantages of such an approach in spatial econometrics is represented by the paper by Seya, Tsutsumi, and Yamagata. Their paper analyse regional income disparities at the municipal level in Japan in the period after the economic bubble burst. In the empirical exercise, a Bayesian method is adopted in order to provide robust estimates under the existence of heteroskedasticity and outliers in spatial specications. Results conform to the -convergence hypothesis in the set of Japanese municipalities but only for the period 19902000, and not afterwards. The amount of disparity in the municipal income distribution, as proxied by the -convergence measure, increased from 2000, whether or not spatial dependence is accounted for in the analysis. Smirnov and Egan use an original approach based on the idea of spatial random utility and discrete choices in the eld of travel destinations. They examine the problem of measuring unobserved spatial dependence between individuals and incorporate it in a spatial discrete choices modelling framework. Specically they discuss the case of recreational travel choices in Iowa and use a random utility approach to model the effects of spatial interdependencies among

3859 households when choosing their travel destinations in the year 2002. The authors show that spatial interdependencies among household create signicant similarities in the neighbors preferences and that, on the average, about 16% of households' preferences are affected by their neighbors. The general issue of spatial interdependencies constitutes the basis of the paper by Yokoi and Ando. The two authors discuss the specication of one-directional effects and not mutual dependencies. Using an empirical study (a spatial autoregressive model of land price data in Fukui Prefecture, Japan) and Monte Carlo simulations (contiguity matrices built based on regular lattices using the rook criteria), the authors show that spatial dependencies might not be recognized if such dependencies are assumed to be reciprocal.

Giuseppe Arbia Enrique Lopez Bazo Francesco Moscone Corresponding author. E-mail address: francesco.moscone@brunel.ac.uk(F. Moscone).