Strategy of Spatial Panel Estimation: Spatial Spillovers Between Taxation and Economic Growth

Abstract

Spatial panels are a powerful econometric tool for the estimation of space-dependent cross-sectional time-series models of economic phenomena. A plethora of parameters and possible specifications require a systematic approach to estimation. This paper presents a strategy of estimation to be considered in applied research on economic policy, including the concept of spatial spillovers and its local and global effects, direct and indirect impacts, as well as the role of different spatial weighting schemes. The paper presents fiscal factors affecting GDP between the years 2002–2015 in a number of European economies.