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Article

Functional-Coefficient Spatial Durbin Models with Nonparametric Spatial Weights: An Application to Economic Growth

by 1,2 and 1,*
1
Department of Economics and Finance, University of Guelph, Guelph, ON N1G2W1, Canada
2
Department of Economics, Süleyman Şah University, Istanbul 34956, Turkey
*
Author to whom correspondence should be addressed.
Academic Editor: Isabel Casas
Econometrics 2016, 4(1), 6; https://doi.org/10.3390/econometrics4010006
Received: 6 November 2015 / Revised: 11 January 2016 / Accepted: 19 January 2016 / Published: 3 February 2016
(This article belongs to the Special Issue Nonparametric Methods in Econometrics)
This paper considers a functional-coefficient spatial Durbin model with nonparametric spatial weights. Applying the series approximation method, we estimate the unknown functional coefficients and spatial weighting functions via a nonparametric two-stage least squares (or 2SLS) estimation method. To further improve estimation accuracy, we also construct a second-step estimator of the unknown functional coefficients by a local linear regression approach. Some Monte Carlo simulation results are reported to assess the finite sample performance of our proposed estimators. We then apply the proposed model to re-examine national economic growth by augmenting the conventional Solow economic growth convergence model with unknown spatial interactive structures of the national economy, as well as country-specific Solow parameters, where the spatial weighting functions and Solow parameters are allowed to be a function of geographical distance and the countries’ openness to trade, respectively. View Full-Text
Keywords: functional coefficients; local linear regression; nonparametric 2SLS estimator; series estimator; Solow economic growth convergence model; spatial Durbin model functional coefficients; local linear regression; nonparametric 2SLS estimator; series estimator; Solow economic growth convergence model; spatial Durbin model
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MDPI and ACS Style

Koroglu, M.; Sun, Y. Functional-Coefficient Spatial Durbin Models with Nonparametric Spatial Weights: An Application to Economic Growth. Econometrics 2016, 4, 6. https://doi.org/10.3390/econometrics4010006

AMA Style

Koroglu M, Sun Y. Functional-Coefficient Spatial Durbin Models with Nonparametric Spatial Weights: An Application to Economic Growth. Econometrics. 2016; 4(1):6. https://doi.org/10.3390/econometrics4010006

Chicago/Turabian Style

Koroglu, Mustafa, and Yiguo Sun. 2016. "Functional-Coefficient Spatial Durbin Models with Nonparametric Spatial Weights: An Application to Economic Growth" Econometrics 4, no. 1: 6. https://doi.org/10.3390/econometrics4010006

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