Model Selection in Spatial Econometric Models

Abstract

In this chapter, the statistical validation of spatial econometric models is approached from a different perspective, based on model selection or model discrimination techniques. In this context, the issue of selecting one model from among a number of alternative candidates is considered as a decision problem. More specifically, attention is focused on the nature of the trade-off between the number of parameters included in the model and the model fit, in the sense of how well the estimated model predicts in-sample observations.