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22-09-2016

Spatial regimes in regional European growth: an iterated spatially weighted regression approach

Authors: M. Simona Andreano, Roberto Benedetti, Paolo Postiglione

Published in: Quality & Quantity | Issue 6/2017

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Abstract

This paper proposes a new technique based on an iterated spatially weighted regression procedure to verify the presence of economic growth heterogeneities in EU regions in the period 1981–2009. The approach extends a procedure originally proposed in the field of image analysis based on the assumption of local homogeneity of the signal. The presence of the heterogeneity is a criterion to divide the sample of observations (i.e. regions) into smaller homogeneous groups. Our results highlight the presence in the EU regions of five different clubs with different growth paths within each subgroup. Spatial dependence is also considered in the definition of the economic convergence model.

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Euclidean and contiguity distance matrices were also considered, but methodological considerations and empirical results suggest to choose the normalized distance from the five nearest neighbor’s regions.

We are aware that the interpretation of parameters estimates in a spatially lagged model, as SDM, should be performed using impact measures as highlighted by LeSage and Pace (2009). However, for the sake of simplicity, we report the impact measures only for the local models (i.e., convergence clubs) identified through the ISWR.

The procedure was tested with different settings of η in the interval [0;1], with not significant differences in the final identification of the homogeneous groups.

Polzehl and Spokoiny (2000) use a scale parameter equivalent to our 1/τ.

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Title: Spatial regimes in regional European growth: an iterated spatially weighted regression approach
Authors: M. Simona Andreano
Roberto Benedetti
Paolo Postiglione
Publication date: 22-09-2016
Publisher: Springer Netherlands
Published in: Quality & Quantity / Issue 6/2017
Print ISSN: 0033-5177
Electronic ISSN: 1573-7845
DOI: https://doi.org/10.1007/s11135-016-0415-1

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