Spatial Dependence in Regression Error Terms

The analysis of the effects of spatial dependence in the error terms of the linear regression model was the first specifically spatial econometric issue to be addressed in the regional science literature. Initial problem descriptions and the suggestion of some solutions were formulated in the early 1970’s, e.g., by Fisher (1971), Berry (1971), Cliff and Ord (1972), McCamley (1973), Hordijk (1974), Martin (1974), Bodson and Peeters (1975), and Hordijk and Paelinck (1976). This was followed by many further assessments of the properties of various estimators and test statistics, which continue to be formulated to date. Spatial error autocorrelation is also the only spatial aspect of inference that has been recognized in the standard econometric literature, though only very recently and to a limited extent, e.g., in Johnston (1984) and King (1981, 1987).