A modified spatial cross-correlation measure for time-dependent spatial panel data

Abstract

A spatial cross-correlation is a measure of the interaction of one local variable on another variable of the surrounding regions. In regional economics, the observed variables are mostly dynamic over time. When the time dimension is accommodated using spatial panel data, the time dependence can be addressed properly. Therefore, this study aims to formulate a dynamic time-dependent spatial cross-correlation index based on spatial panel data. The conducted simulation study shows the good performance of the measure. It also performs well in measuring the spatial cross-correlation between regional GDP growth and the percentage of urban population of the 38 East Java regencies/ municipalities.