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The monitoring of the regional (provincial) economic situation is of particular importance due to the high level of heterogeneity and interdependences among different territories. Although econometric models allow for spatial and serial correlation of various kinds, the limited availability of territorial data restricts the set of relevant predictors at a more disaggregated level, especially for gross domestic product (GDP). Combining data from different sources at NUTS-3 level, this paper evaluates the predictive performance of a spatial dynamic panel data model with individual fixed effects and some relevant exogenous regressors, by using data on total gross value added (GVA) for 103 Italian provinces over the period 2000–2016. A comparison with nested panel sub-specifications as well as pure temporal autoregressive specifications has also been included. The main finding is that the spatial dynamic specification increases forecast accuracy more than its competitors throughout the out-of-sample, recognising an important role played by both space and time. However, when temporal cointegration is detected, the random-walk specification is still to be preferred in some cases even in the presence of short panels. [ABSTRACT FROM AUTHOR]

Given the extreme dependence of agriculture on weather conditions, this paper analyses the effect of climatic variations on this economic sector, by considering both a huge data set and a flexible spatiotemporal model specification. In particular, we study the response of N‐fertilizer application to abnormal weather conditions, while accounting for other relevant control variables. The data set consists of gridded data spanning over 21 years (1993–2013), while the methodological strategy makes use of a spatial dynamic panel data (SDPD) model that accounts for both space and time fixed effects, besides dealing with both space and time dependences. Time‐invariant short‐ and long‐term effects, as well as time‐varying marginal effects are also properly defined, revealing interesting results on the impact of both GDP and weather conditions on fertilizer utilizations. The analysis considers four macroregions—Europe, South America, Southeast Asia and Africa—to allow for comparisons among different socio‐economic societies. In addition to finding both spatial (in the form of knowledge spillover effects) and temporal dependences as well as a good support for the existence of an environmental Kuznets curve for fertilizer application, the paper shows peculiar responses of N‐fertilization to deviations from normal weather conditions of moisture for each selected region, calling for ad hoc policy interventions. [ABSTRACT FROM AUTHOR]

In this paper, we propose a Partial MLE (PMLE) for a general spatial nonlinear probit model, i.e., SARAR(1,1) probit, defined through a SARAR(1,1) latent linear model. This model encompasses both the SAE(1) probit and the more interesting SAR(1) probit models, already considered in the literature. We provide a complete asymptotic analysis of our PMLE as well as appropriate definitions of the marginal effects. Moreover, we address the issue of the choice of the groups (couples, in our case) by proposing an algorithm based on a minimum KL divergence problem. Finite sample properties of the PMLE are studied through extensive Monte Carlo simulations. In particular, we consider both sparse and dense matrices for the true spatial model specifications, and cases of model misspecification given wrong assumed weighting matrices. In a real data example, we finally also compare our estimator with different MLE–based estimators and with the Bayesian approach. [ABSTRACT FROM AUTHOR]

In spatial discrete choice models the spatial dependent structure adds complexity in the estimation of parameters. Appropriate general method of moments (GMM) estimation needs inverses of n-by-n matrices and an optimization complexity of the moment conditions for moderate to large samples makes practical applications more difficult. Recently, Klier and McMillen (2008) have proposed a linearized version of the GMM estimator that avoids the infeasible problem of inverting n-by-n matrices when employing large samples. They show that standard GMM reduces to a nonlinear two-stage least squares problem. On the other hand, when we deal with full maximum likelihood (FML) estimation, a multidimensional integration problem arises and a viable computational solution needs to be found. Although it remains somewhat computationally burdensome, since the inverses of matrices dimensioned by the number of observations have to be computed, the ML estimator yields the potential advantage of efficiency. Therefore, through Monte Carlo experiments we compare GMM-based approaches with ML estimation in terms of their computation times and statistical properties. Furthermore, a comparison in terms of the marginal effects also is included. Finally, we recommend an algorithm based on sparse matrices that enables more efficient use of both ML and GMM estimators. [ABSTRACT FROM AUTHOR]