Exercise 4.6 In a spatial panel constituted by n = 3 individuals, we have T = 2 time observations. Given the following W matrix:

0 1 1

= 1 0 0 1 0 0 W

⎡ ⎤

⎢ ⎥

⎢ ⎥

⎢ ⎥

⎢ ⎥

⎣ ⎦

and the parameters σm2 = 1 and λ = 0.3, derive the explicit form of the matrix IT ⊗ A and of the matrix 2 ( )

σm JT ⊗ In .