New Directions in Spatial Econometrics: Introduction

Since Paelinck coined the term ‘spatial econometrics’ in the early 1970s to refer to a set of methods that deal with the explicit treatment of space in multiregional models, the field has come a long way. The early results established in regional economics by Blommestein, Hordijk, Klaassen, Nijkamp, Paelinck and others [e.g., Hordijk and Nijkamp (1977), Hordijk (1979), Paelinck and Klaassen (1979), Blommestein (1983)], as well as the path breaking work of Cliff and Ord in geography [Cliff and Ord (1973, 1981), Ord (1975)] have grown into a broad set of models, tests and estimation techniques that incorporate space more effectively in econometric modeling [for recent overviews, see Anselin (1988, 1992a), Haining (1990), Cressie (1991)]. In spite of these important methodological developments, it would be an overstatement to suggest that spatial econometrics has become accepted practice in current empirical research in regional science and regional economics. On the positive side, the sad State of affairs reflected in the literature surveys of Anselin and Griffith (1988) and Anselin and Hudak (1992) seems to have taken a turn for the better, since there is evidence of an increased awareness of the importance of space in recent empirical work in ‘mainstream’ economics. For example, this is indicated by the use of spatial models in the study of fiscal spill-overs in Case et al. (1993), the analysis of the productivity effects of public sector capital in Holtz-Eakin (1994), and the assessment of land price volatility in Benirschka and Binkley (1994), among others.