Detection and estimation of block structure in spatial weight matrix

Lam, Clifford ORCID: 0000-0001-8972-9129 and Souza, Pedro C.L. (2015) Detection and estimation of block structure in spatial weight matrix. Econometric Reviews. ISSN 0747-4938

Preview

PDF - Accepted Version Download (1MB) | Preview

• Author

Abstract

In many economic applications, it is often of interest to categorize, classify or label individuals by groups based on similarity of observed behavior. We propose a method that captures group affiliation or, equivalently, estimates the block structure of a neighboring matrix embedded in a Spatial Econometric model. The main results of the LASSO estimator shows that off-diagonal block elements are estimated as zeros with high probability, property defined as “zero-block consistency”. Furthermore, we present and prove zero-block consistency for the estimated spatial weight matrix even under a thin margin of interaction between groups. The tool developed in this paper can be used as a verification of block structure by applied researchers, or as an exploration tool for estimating unknown block structures. We analyzed the US Senate voting data and correctly identified blocks based on party affiliations. Simulations also show that the method performs well.

Item Type:	Article
Official URL:	http://www.tandfonline.com/toc/lecr20/current
Additional Information:	© 2015 Taylor and Francis
Divisions:	Economics Statistics
Subjects:	H Social Sciences > HA Statistics Q Science > QA Mathematics
JEL classification:	C - Mathematical and Quantitative Methods > C3 - Econometric Methods: Multiple; Simultaneous Equation Models; Multiple Variables; Endogenous Regressors > C31 - Cross-Sectional Models; Spatial Models; Treatment Effect Models C - Mathematical and Quantitative Methods > C3 - Econometric Methods: Multiple; Simultaneous Equation Models; Multiple Variables; Endogenous Regressors > C33 - Models with Panel Data
Date Deposited:	21 Oct 2014 13:15
Last Modified:	12 Dec 2024 00:49
URI:	http://eprints.lse.ac.uk/id/eprint/59898

Actions (login required)

View Item