This paper studies the spatial random effects and spatial fixed effects model. The model includes a Cliff and Ord type spatial lag of the dependent variable as well as a spatially lagged one-way error component structure, accounting for both heterogeneity and spatial correlation across units. We...

This paper analyses the entire wage effects of unemployment for an especially long observation period. In a three‐step approach, the wage reaction at the national level (wage‐setting curve or aggregate wage equation) is added to the reaction at the regional level (wage curve). Spatial models...

Rational expectations has been the dominant way to model expectations, but the literature has quickly moved to a more realistic assumption of boundedly rational learning where agents are assumed to use only a limited set of information to form their expectations. A standard assumption is that...