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Exploring scan methods to test spatial structure with an application to housing prices in Madrid

Author

Listed:
  • López, Fernando A.
  • Chasco, Coro
  • Gallo, Julie Le

Abstract

We evaluate the usefulness of the spatial scan test in specification testing for spatial econometric models. The null hypothesis assumes equality of the mean values of a variable in all the locations of a georeferenced data set. The alternative hypothesis relies on the existence of one (or more) spatial cluster(s) where mean values differ from those of the rest of the sample. First, we conduct a MonteCarlo simulation study to analyse the properties of this test when applied to regression residuals. Second, we illustrate this test with an empirical application on housing prices in Madrid.

Suggested Citation

Handle: RePEc:eee:paresc:v:94:y:2015:i:2:p:317-347
DOI: 10.1111/pirs.12063
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JEL classification:

  • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
  • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
  • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
  • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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