Abstract
This study estimates the spillover effect of productivity function, and measures marginal effects of the production on the capital and labor force, using the spatial dynamic panel data model with prefecture panel data from 2001 to 2009. We introduce the spatial dynamic panel data model with random effects and the Bayesian methodology, and explain to decompose the marginal effects into the direct effect and indirect effect in the short term and the long term. From the empirical results by using Markov chain Monte Carlo (MCMC) method, it is found that the prefectural productivity depends on spatially and serial correlations. Futhermore, the indirect effect of the labor force is effective in the short term. On the contrary, the direct effect of the labor force in the long term is larger than that in the short term.
