Carlo Ciccarelli|J. Paul Elhorst
A dynamic spatial econometric diffusion model with common factors: The rise and spread of cigarette consumption in Italy
University of Rome Tor Vergata|University of Groningen
paper adopts dynamic spatial panel data model common factors explain nonstationary diffusion process cigarette consumption across 69 italian provinces period 18771913 cdtest pesaran 2015a exponent test bailey et al 2015 crosssectionally augmented panel unit root test pesaran et al 2013 spatial stability test yu et al 2012 used show global common factors local spatial dependence important drivers propagation cigarette demand period determine point hypothesis stationarity longer needs rejected favor unit root direct indirect effects derived coefficient estimates model show cigarettes normal good income elasticity 04 price elasticity 04 long term price elasticity 04 consists direct effect 054 region spillover effect regions 015 positive spillover effect line previous spatial econometric studies investigated cigarette demand us states recent period