Spillover effects in spatial models: Generalizations and extensions

In this paper, we consider two different cases of spillover effects: the first is a case where the model does not contain any additional endogenous regressors. Related to this, we give a variance formula that can be used to make inference for estimated spillover effects. In the second case, we extend the discussion of spillover effects to a model containing additional endogenous variables. We suggest approximations to the spillover effects that according to the results of our Monte Carlo experiment are quite accurate. However, our variance formula can not be determined unless the equations of the entire system are known. Suggestions for approximations in this case are left for future research.