A new Stata command for spatial differencing estimation is now available. `sreg`

fits the following model:

where is the outcome of unit located in area with , is a -vector of exogenous covariates, is the idiosyncratic error and is an unobserved local effect for the unobserved location , , possibly at a finer spatial scale than . Estimating this model by ordinary least squares ignoring gives a consistent estimate of only if . If we set aside this unrealistic assumption and allow for arbitrary correlation between the local unobservables and the explanatory variables, i.e. , a non-experimental approach to estimating the model involves, in some way, transforming the data to rule out . An increasingly common way to deal with this issue is the so-called spatial differencing approach.

`sreg`

implements the spatial differencing estimator described in Belotti et al. (2017), as well as different variance-covariance estimators, among which the dyadic-robust (Cameron and Miller, 2014) and the Duranton et al. (2011)'s analytically-corrected estimators. Of special note is that `sreg`

also allow to apply the spatial differencing transformation to units located in contiguous clusters ("boundary-discontinuity" design).

The command was written together with Edoardo Di Porto and Gianluca Santoni.

You may install it by typing

**net install sreg, from(http://www.econometrics.it/stata)**

in your Stata command bar. Stata version 14.2 is required.

HTH,

Federico