Spatial Linear Regression Models

This chapter discusses different specifications of linear spatial econometrics models that can be considered once the hypothesis of no spatial autocorrelationspatialautocorrelationautocorrelation in the disturbances is violated. In particular, we present models where the idea of the spatial lag is applied to the dependent variable, to the independent variables, to the residuals or to any of their combinations. For each model, we provide the mathematical specification, we derive the appropriate estimators and we discuss their statistical properties, their relative advantages and their drawbacks. For the various models, we also introduce the tools necessary to measure the impact of changes in the independent variables on the dependent variable which are necessary in policy evaluations and scenario analyses. The chapter concludes with all the computer codes which are necessary to implement the procedures presented in the R, STATA and Python environments.