### Abstract

This note shows that for a spatial regression with equal weights, the LM test is always equal to N / 2(N - 1), where N is the sample size. This means that this test statistics is a function of N and not a function of the spatial parameter ρ. In fact, this test statistic tends to one half for N tending to infinity. The null hypothesis of no spatial correlation is never rejected no matter what ρ is.

Original language | English (US) |
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Pages (from-to) | 81-82 |

Number of pages | 2 |

Journal | Economics Letters |

Volume | 104 |

Issue number | 2 |

DOIs | |

State | Published - Aug 1 2009 |

### Keywords

- Equal weights
- Lagrange multiplier
- Spatial error correlation

### ASJC Scopus subject areas

- Finance
- Economics and Econometrics

## Fingerprint Dive into the research topics of 'Spatial lag test with equal weights'. Together they form a unique fingerprint.

## Cite this

Baltagi, B. H., & Liu, L. (2009). Spatial lag test with equal weights.

*Economics Letters*,*104*(2), 81-82. https://doi.org/10.1016/j.econlet.2009.04.008