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The distance decay effect and spatial reach of spillovers

Author

Listed:
  • J. Paul Elhorst

    (University of Groningen)

  • Ioanna Tziolas

    (University of Groningen)

  • Chang Tan

    (University of Groningen)

  • Petros Milionis

    (University of Groningen)

Abstract

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 weight matrix and parameterize it by a decay parameter that is different for each spatial lag in this model, both of the regressand and of all regressors. The quantification and illustration are applied to the spatially augmented neoclassical growth framework, which we estimate using data for 266 NUTS-2 regions in the EU over the period 2000–2018. We find distance decay parameters ranging from 0.233 to 2.224 and spatial reaches ranging from 700 to more than 1500 km for the different growth determinants in this model. These wide ranges highlight the restrictiveness of the conventional SD model based on one common spatial weight matrix for all spatial lags.

Suggested Citation

  • J. Paul Elhorst & Ioanna Tziolas & Chang Tan & Petros Milionis, 2024. "The distance decay effect and spatial reach of spillovers," Journal of Geographical Systems, Springer, vol. 26(2), pages 265-289, April.
    • Handle: RePEc:kap:jgeosy:v:26:y:2024:i:2:d:10.1007_s10109-024-00440-5
    DOI: 10.1007/s10109-024-00440-5
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    Cited by:

    1. Alan T. Murray & Luc Anselin & Sergio J. Rey, 2024. "Arthur Getis: a legend in geographical systems," Journal of Geographical Systems, Springer, vol. 26(2), pages 181-190, April.

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    More about this item

    Keywords

    Regional economic growth; Growth spillovers; Regional proximity; Distance decay;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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