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Spatial-temporal heteroskedastic robust covariance estimation for Markov transition probabilities: an application examining land use change

Author

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  • D. M. Lambert

    (The University of Tennessee)

  • C. N. Boyer

    (The University of Tennessee)

  • L. He

    (The University of Tennessee)

Abstract

A spatial-temporal autocorrelation consistent covariance matrix is suggested for estimating the standard errors of a first-order Markov process model depicting aggregate land use dynamics. Particular attention is given to covariance estimation robust to temporal and spatial dependence. An empirical example compares the adjusted covariance estimators by examining cropland dynamics, revenue, and the corresponding own-price area supply elasticities with a Monte Carlo analysis. The relative precision of own-price elasticities increased in most cases, suggesting gains in efficiency when the covariance estimator of transition probabilities is adjusted for temporal and spatial dependence and cross-equation correlation. In this example, adjusting for temporal-spatial dependence moderates the absolute magnitude of elasticity point estimates. The approaches suggested in this letter will be of interest to researchers modeling land use transitions with aggregate data.

Suggested Citation

  • D. M. Lambert & C. N. Boyer & L. He, 2016. "Spatial-temporal heteroskedastic robust covariance estimation for Markov transition probabilities: an application examining land use change," Letters in Spatial and Resource Sciences, Springer, vol. 9(3), pages 353-362, October.
    • Handle: RePEc:spr:lsprsc:v:9:y:2016:i:3:d:10.1007_s12076-015-0164-0
    DOI: 10.1007/s12076-015-0164-0
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    Cited by:

    1. Dayton M. Lambert, 2020. "Dynamic panel estimation of a regional adjustment model with spatial-temporal robust covariance," Letters in Spatial and Resource Sciences, Springer, vol. 13(3), pages 245-265, December.

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    More about this item

    Keywords

    Transition probabilities; Land use; Elasticities; Spatial-temporal covariance; Multinomial logit;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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