This paper adopts a spatial probit approach to explain interaction effects among cross-sectional units when the dependent variable takes the form of a binary response variable and transitions from state 0 to 1 occur at different moments in time. The model has two spatially lagged variables: one for units that are still in state 0 and one for units that had already transferred to state 1. The parameters are estimated on observations for those units that are still in state 0 at the start of the different time periods, whereas observations on units after they transferred to state 1 are discarded, just as in the literature on duration modeling. Furthermore, neighboring units that had not yet transferred may have a different impact from units that had already transferred. We illustrate our approach with an empirical study of the adoption of inflation targeting for a sample of 58 countries over the period 1985–2008. Copyright © 2016 John Wiley & Sons, Ltd

Item Type:	Refereed Article
Research Division:	Economics
Research Group:	Applied Economics
Research Field:	Financial Economics
Objective Division:	Economic Framework
Objective Group:	Macroeconomics
Objective Field:	Fiscal Policy
Author:	Jacobs, JPAM (Associate Professor Jan Jacobs)
ID Code:	106840
Year Published:	2017 (online first 2016)
Web of Science® Times Cited:	3
Deposited By:	Tasmanian School of Business and Economics
Deposited On:	2016-02-23
Last Modified:	2017-10-25
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