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weighted spatial autoregression

Sam,
On Wed, 29 Aug 2007, Sam Field wrote:

            
You could fake it with nb2blocknb, but that was not written for this case, 
but for the case when the individual level variables were observed, but 
that there was no address or coordinates, just a postal code. Here the LHS 
and RHS would be replicated, which doesn't seem desirable.
One interesting conclusion that I've reached is that while the spdep code 
in spautolm() replicates Waller and Gotway for unweighted and weighted SAR 
and CAR, S-Plus SpatialStats fails on the weighted CAR. The reason seems 
to be that W+G did the same as spautolm() (in SAS?) - find the spatial 
autoregressive coefficient first (optimise in one dimension), then use GLS 
to find the regression coefficients. But S+ seems to try to optimise all 
the coefficients at once, and gets bitten by the fact that
(I - \rho W) %*% diag(wts) in their case is not symmetric (W has to be 
symmetric, and the wts have to "balance" - see Cressie etc. Now I'm not 
sure that S+ is right here. If not, then the lag model can be given 
weights too, by simply passing them to the auxilliary regressions used to 
set up the framework for optimisation. The analytical covariance matrix of 
the coefficients remains a problem, though. We'd need to use some other 
mechanism to get there for the eigen method, though the LR tests used for 
sparse methods would be, I think, OK. I've also been playing with sampling 
from a fitted model, to generate synthetic "standard errors", like 
mcmcsamp() in lme4, but I don't know if it is sensible, or how well it 
would scale to many observations.

So I am thinking about how lagsarlm() could get weights, but it won't 
happen too fast, maybe.

Best wishes,

Roger