Testing and correcting for spatial unit roots in regression analysis

Spatial unit roots can lead to spurious regression results. We present an overview of the methods developed in Müller and Watson (2024, Econometrica 92: 1661-1695) to test and correct for spatial unit roots and introduce a suite of commands ( spur ) implementing these techniques. Our commands exactly replicate results in Müller and Watson (2024) using the same data as Chetty et al. (2014, Quarterly Journal of Economics 129: 1553-1623). As a guide for applied researchers, we provide a practical algorithm for regression analysis using these methods and a simulated illustration in Stata.