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A Grid Based Approach to Analysing Spatial Weighting Matrix Specification

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  • Rahal, Charles

Abstract

We outline a grid-based approach to provide further evidence against the misconception that the results of spatial econometric models are sensitive to the exact specification of the exogenously set weighting matrix (otherwise known as the 'biggest myth in spatial econometrics'). Our application estimates three large sets of specifications using an original dataset which contains information on the Prime Central London housing market. We show that while posterior model probabilities may indicate a strong preference for an extremely small number of models, and while the spatial autocorrelation parameter varies substantially, median direct effects remain stable across the entire permissible spatial weighting matrix space. We argue that spatial econometric models should be estimated across this entire space, as opposed to the current convention of merely estimating a cursory number of points for robustness.

Suggested Citation

  • Rahal, Charles, 2019. "A Grid Based Approach to Analysing Spatial Weighting Matrix Specification," SocArXiv nt2yq_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:nt2yq_v1
    DOI: 10.31219/osf.io/nt2yq_v1
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