On aggregation in spatial econometric modelling

The spatial aggregation problem – also termed the modifiable areal unit problem – has attracted regular attention in spatial statistics and econometrics. In this study econometric aggregation analysis is used to investigate the formal composition of meso-areal parameters given micro-areal underlying relations with spatial dependence. Impact on stochastic terms (possible meso-areal spatial autocorrelation) is also studied. Finally consequences for meso-areal estimation are derived, the general finding having been that spatial aggregation leads to meso-region specific parameter values, with the estimation problems this implies.