How to Interpret the Coefficients of Spatial Models: Spillovers, Direct and Indirect Effects
This paper briefly reviews how to derive and interpret coefficients of spatial regression models, including topics of direct and indirect (spatial spillover) effects. These topics have been addressed in the spatial econometric literature over the past 5 6 years, but often at a level sometimes difficult for students new to the field. Our goal is to overcome this handicap by carefully presenting the mathematics behind these spatial effects and clearly illustrating how they work using two small fictive datasets and one large dataset with real data. The motivation for the paper is primarily pedagogical. Theoretical and conceptual impediments associated with the application of procedures are discussed.