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Correcting For Spatial Effects In Limited Dependent Variable Regression: Assessing The Value Of "Ad-Hoc" Techniques

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  • De Pinto, Alessandro
  • Nelson, Gerald C.

Abstract

A common test for spatial dependence in regression analysis with continuous dependent variables is the Moran's I. For limited dependent variable models, the standard definition of a residual breaks down because yi is qualitative. Efforts to correct for potential spatial effects in limited dependent variable models have relied on ad-hoc methods such as including a spatial lag variable or using a regular sample that omits neighboring observations. Kelejian and Prucha have recently developed a version of Moran's I for limited dependent variable models. We present the statistic in a more accessible way and use it to test the value of previously-used ad-hoc techniques with a specific data set. Keywords: Moran's I, Spatial Autocorrelation, Limited Dependent Variable Models, Land-Use Change, Geographical Information Systems (GIS),

Suggested Citation

  • De Pinto, Alessandro & Nelson, Gerald C., 2002. "Correcting For Spatial Effects In Limited Dependent Variable Regression: Assessing The Value Of "Ad-Hoc" Techniques," 2002 Annual meeting, July 28-31, Long Beach, CA 19782, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19782
    DOI: 10.22004/ag.econ.19782
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    1. Denis Bolduc & Bernard Fortin & Stephen Gordon, 1997. "Multinomial Probit Estimation of Spatially Interdependent Choices: An Empirical Comparison of Two New Techniques," International Regional Science Review, , vol. 20(1-2), pages 77-101, April.
    2. Munroe, Darla K. & Southworth, Jane & Tucker, Catherine M., 2001. "The Dynamics Of Land-Cover Change In Western Honduras: Spatial Autocorrelation And Temporal Variation," 2001 Annual meeting, August 5-8, Chicago, IL 20759, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. H. Kelejian, Harry & Prucha, Ingmar R., 2001. "On the asymptotic distribution of the Moran I test statistic with applications," Journal of Econometrics, Elsevier, vol. 104(2), pages 219-257, September.
    4. Case, Anne, 1992. "Neighborhood influence and technological change," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 491-508, September.
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    2. Reetz, Sunny W.H. & Brümmer, Bernhard, 2011. "Determinants of Land Use Change Dynamics in the Margins of Protected Forest Areas: Evidence from Central Sulawesi, Indonesia," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114794, European Association of Agricultural Economists.

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