A Spatial Dynamic Panel Model with Random Effects Applied to Commuting Times

Abstract

A space–time filter is set forth for spatial panel data situations that include random effects. We propose a general spatial dynamic specification that encompasses several spatiotemporal models previously used in the panel data literature. We apply the model to the case of highway induced travel demand. The theory of induced travel demand asserts that increased highway capacity will induce growth in traffic for a number of reasons. Our model allows us to quantify the spatial spillover impacts of increased highway capacity at one location in the network on travel times in neighboring locations and in future time periods.

Keywords: Spatial correlation, Dynamic panels, MCMC estimations

JEL Classification: C11, C21, C23, R11