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Construction of a Spatial Housing Price Index by Estimating an Almost Ideal Demand System

Listed author(s):
  • Víctor Iturra
  • Dusan Paredes

The aim of this paper is to build, for the first time, a spatial housing price index for the Chilean communities. The first step is to recover hedonic prices of three housing attributes by estimating a mixed index model using a generalised method of moments (GMM) procedure. Second, a censored almost ideal demand system is estimated to build expenditures for every community and to compare them among different spatial units, while maintaining a constant utility level. Using micro data from the 2009 CASEN survey, we show that there are important differences in the expenditure of a consumer in Santiago to access the same level of welfare in another community in the country and there are important differences in housing prices among Chilean communities

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File URL: http://hdl.handle.net/10.1111/tesg.12067
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Article provided by Royal Dutch Geographical Society KNAG in its journal Tijdschrift voor economische en sociale geografie.

Volume (Year): 105 (2014)
Issue (Month): 3 (07)
Pages: 301-314

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Handle: RePEc:bla:tvecsg:v:105:y:2014:i:3:p:301-314
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  1. Ricardo Lira, 1978. "Precios Implícitos de Características de Viviendas en Santiago," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 15(44), pages 67-90.
  2. Edward L. Glaeser, Jed Kolko, and Albert Saiz, 2001. "Consumer city," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 27-50, January.
  3. Brasington, David M. & Hite, Diane, 2008. "A mixed index approach to identifying hedonic price models," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 271-284, May.
  4. Roger J. Bowden, 1992. "Competitive Selection and Market Data: The Mixed-Index Problem," Review of Economic Studies, Oxford University Press, vol. 59(3), pages 625-633.
  5. Koo, Jahyeong & Phillips, Keith R & Sigalla, Fiona D, 2000. "Measuring Regional Cost of Living," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(1), pages 127-136, January.
  6. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
  7. Heien, Dale & Wessells, Cathy Roheim, 1990. "Demand Systems Estimation with Microdata: A Censored Regression Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 365-371, July.
  8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  9. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  10. Stephen Malpezzi, "undated". "Hedonic Pricing Models: A Selective and Applied Review," Wisconsin-Madison CULER working papers 02-05, University of Wisconsin Center for Urban Land Economic Research.
  11. Eugenio Figueroa & George Lever, 1992. "Determinantes del precio de la vivienda en Santiago: Una estimación hedónica," Estudios de Economia, University of Chile, Department of Economics, vol. 19(1 Year 19), pages 67-84, June.
  12. Timmins, Christopher, 2006. "Estimating spatial differences in the Brazilian cost of living with household location choices," Journal of Development Economics, Elsevier, vol. 80(1), pages 59-83, June.
  13. Dusan Paredes & Patricio Aroca, 2008. "Metodología para Estimar un Indice Regional de Costo de Vivienda en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 45(131), pages 129-143.
  14. W. Erwin Diewert, 1995. "Axiomatic and Economic Approaches to Elementary Price Indexes," NBER Working Papers 5104, National Bureau of Economic Research, Inc.
  15. Halvorsen, Robert & Pollakowski, Henry O., 1981. "Choice of functional form for hedonic price equations," Journal of Urban Economics, Elsevier, vol. 10(1), pages 37-49, July.
  16. Dusan Paredes, 2011. "A methodology to compute regional housing price index using matching estimator methods," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 46(1), pages 139-157, February.
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