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Spatial econometrics is a subarea of the broader field of econometrics. It can be defined as the branch of economics that applies statistical and mathematical rigor to the study of economic theories and relationships. By bringing econometric theory and methods to the analysis of spatial data, spatial econometrics offers an appropriate analytical framework and approach in situations where traditional statistical tools and methodologies often are inappropriate.

A spatial econometric approach to regional variations in income, for example, could be to ask why household income is higher in some regions of the country than in others. The spatial econometrician might begin by examining, say, median income of households from a national census, for all subregions of a country. The income variable might then be modeled by ...

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