The diffusion of COVID-19 across Italian provinces: a spatial dynamic panel data approach with common factors

This study adopts a spatial dynamic panel data model with common factors and a connectivity matrix based on cross-province population flows to help explain the spread of COVID-19 infections across Italian provinces during the period 2020-21. We find that an increase in the infections in a province has a positive and statistically significant effect on neighbours' infections, which highlights the relevance of spatial spillover effects. This finding is robust to several robustness checks. Furthermore, we investigate cross-provincial transmission heterogeneity using a heterogeneous spatial dynamic panel, which provides novel insights into the diffusion patterns of the disease.