Infrastructure Productivity Estimation and its Underlying Econometric Specifications: A Sensitivity Analysis
In recent years researchers have considered a variety of regional models relating to infrastructure productivity. These models are often based upon overly simple econometric specifications and are typically formulated as if spatial interactions are absent. In this paper, we try to account for some of these shortcomings. We do this by considering spatial lags of certain independent variables, as well as of the dependent variable. We also consider spatial correlation of the error terms, general patterns of heteroscedasticity and of time series autocorrelation, and systems problems. Our results strongly suggest that regional infrastructure productivity involves spatial spillovers relating to both observable variables and error terms. They also suggest that corresponding coefficient estimates are very sensitive to model specifications.