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How to Interpret the Coefficients of Spatial Models: Spillovers, Direct and Indirect Effects

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Abstract

This paper briefly reviews how to derive and interpret coefficients of spatial regression models, including topics of direct and indirect (spatial spillover) effects. These topics have been addressed in the spatial econometric literature over the past 5–6 years, but often at a level sometimes difficult for students new to the field. Our goal is to overcome this handicap by carefully presenting the mathematics behind these spatial effects and clearly illustrating how they work using two small fictive datasets and one large dataset with real data. The motivation for the paper is primarily pedagogical. Theoretical and conceptual impediments associated with the application of procedures are discussed.

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Notes

  1. The two parts of the SAC model are represented here as using the same weights matrix, W. This is a matter of notational convenience and not a requirement of the model. Different W matrices can be used without altering the point of the example.

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Authors and Affiliations

  1. Cedeplar/UFMG, Belo Horizonte, Brazil

    André Braz Golgher

  2. RRI/WVU, Morgantown, WV, USA

    André Braz Golgher

  3. Carolina Population Center, UNC Chapel Hill, Chapel Hill, NC, USA

    André Braz Golgher

  4. Odum Institute for Research in Social Science, UNC Chapel Hill, Chapel Hill, NC, USA

    Paul R. Voss

Authors
  1. André Braz Golgher
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  2. Paul R. Voss
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Correspondence to Paul R. Voss.

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Golgher, A.B., Voss, P.R. How to Interpret the Coefficients of Spatial Models: Spillovers, Direct and Indirect Effects. Spat Demogr 4, 175–205 (2016). https://doi.org/10.1007/s40980-015-0016-y

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  • DOI: https://doi.org/10.1007/s40980-015-0016-y

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