Hierarchy and spatial autocorrelation effects in hedonic models
EntityUAM. Departamento de Economía Aplicada
CitationEconomics Bulletin 32.2 (2012): 1474-1480
Funded byThis work has been carried out with the financial support of the Spanish Ministry of Education and Science ECO2009-10534
SubjectsPrecio de la vivienda; Econometría; Economía
Models of hedonic housing prices have to deal with spatial autocorrelation in order to avoid bias and inconsistency in the estimates of the coefficients. Multilevel models have been presented as a way to adequately consider the effects of neighborhood amenities that operate at different spatial hierarchies. In this paper this feature is tested by specifying a three-level model for a data set in the center of Madrid, which includes spatially lagged explanatory variables. The results show that hierarchical models are not able to fully grasp spatial autocorrelation so that a greater effort should be made in the development of appropriate spatial multilevel models.
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