Dynamic models have been studied intensively during the last decade, particularly in the field of growth theory and diffusion analysis. Consequently, problems like <i>temporal </i>autocorrelation have received much attention. Recently the attention of econometricians has also concentrated on <i>spatial </i>autocorrelation, particularly in the field of spatial interaction models. The existence of spatial autocorrelation among spatially dispersed phenomena appears to lead to significant differences in the treatment of multiregional models. In this paper, attention will be focused on the formal aspects of dynamic spatial diffusion models. Some statistical measures for temporal - spatial autocorrelation will be constructed. In addition, a formal derivation of necessary extensions in estimation procedures for dynamic multiregional econometric models will be presented, particularly in the field of seemingly unrelated regressions and instrumental variables. The analysis will be illustrated by means of a dynamic explanatory model for the spatial dispersion of foreign workers in The Netherlands.
