function llike=f_respat(b,beta,y,x,wy,wx,lambda,meany,meanx,wmeany,wmeanx,vmeany,vmeanx,N,T,nvar) % computes teta and spatial autocorrelation % % written by: J.Paul Elhorst summer 2008 % University of Groningen % Department of Economics and Econometrics % 9700AV Groningen % the Netherlands % j.p.elhorst@rug.nl % % REFERENCES: % Elhorst JP (2003) Specification and Estimation of Spatial Panel Data Models, % International Regional Science Review 26: 244-268. % Elhorst JP (2009) Spatial Panel Data Models. In Fischer MM, Getis A (Eds.) % Handbook of Applied Spatial Analysis, Ch. C.2. Springer: Berlin Heidelberg New York. % rho=b(1); teta=b(2); ee=ones(T,1); eigw=zeros(N,1); meanpy=zeros(N,1); meanpx=zeros(N,nvar); for i=1:N eigw(i)=(T*teta^2+1/(1-rho*lambda(i))^2)^(-0.5); meanpy(i,1)=eigw(i)*vmeany(i,1)-(meany(i,1)-rho*wmeany(i,1)); meanpx(i,:)=eigw(i)*vmeanx(i,:)-(meanx(i,:)-rho*wmeanx(i,:)); end yran=y-rho*wy+kron(ee,meanpy); xran=x-rho*wx+kron(ee,meanpx); res=yran-xran*beta; res2=res'*res; somp1=0; somp2=0; for i=1:N p1=1+T*teta^2*(1-lambda(i)*rho)^2; p2=1-lambda(i)*rho; somp1=somp1+log(p1); somp2=somp2+log(p2); end llike=(N*T/2)*log(res2)+1/2*somp1-T*somp2;