Econometric issues in interpreting Mills' estimates of urban density gradients

Abstract

Mills has estimated a first order, autoregressive distributed lag model of the process of adaptation of urban density gradients. The error term in such equations estimated by ordinary least squares is likely autocorrelated, biasing upward the estimated coefficient of the lagged dependent variable. A specification error may be concealed, with autocorrelation in the error term resulting in overestimates of the length of the adjusted lag. Longer time series samples will be required if the nature of the lagged adjustment processes and the error term are to be simultaneously estimated.