2 Closed form estimation of spatial dependence using matrix exponentials
This section sets forth a unique interior optimal spatial transformation of the dependent variable. Section
2.1
presents the MESS model based on this spatial transformation, section
2.2
discusses the matrix exponential and its computation in a statistical context and section
2.3
provides the closed form solution that is based on the eigenvalues of a small matrix. Section
2.4
proves that the solution is both interior and unique, while section
2.5
illustrates hypothesis testing for the MESS model and section
2.6
details the construction of diagnostic statistics.
