IDEAS home Printed from
   My bibliography  Save this article

A spatial cost of living index for Colombia using a microeconomic approach and censored data


  • Laura H. Atuesta
  • Dusan Paredes Araya


This article describes a methodology to calculate a Spatial Cost of Living (SCOL) index using the Colombian data for 2006 that considers the microeconomic behaviour of households. Estimating an Almost Ideal Demand System (AIDS) to recover the expenditure function of the 23 main Colombian cities, the index is compared to the fixed basket approach and to an alternative methodology proposed by Romero (2005). This comparison suggests that the index is biased when the substitution effects are not considered, and this bias increases when the difference in expenditure levels between cities increases. According to our calculations, Bogota is still the most expensive city in the country.

Suggested Citation

  • Laura H. Atuesta & Dusan Paredes Araya, 2012. "A spatial cost of living index for Colombia using a microeconomic approach and censored data," Applied Economics Letters, Taylor & Francis Journals, vol. 19(18), pages 1799-1805, December.
  • Handle: RePEc:taf:apeclt:v:19:y:2012:i:18:p:1799-1805 DOI: 10.1080/13504851.2012.657347

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Humphrey, David B., 2004. "Replacement of cash by cards in US consumer payments," Journal of Economics and Business, Elsevier, vol. 56(3), pages 211-225.
    2. Gérard Duchêne & Ramona Jimborean & Boris Najman, 2006. "Structure of Monetary Assets in Transition Economies: Financial Innovation and Structural Transformation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00270544, HAL.
    3. Helmut Stix, 2004. "How Do Debit Cards Affect Cash Demand? Survey Data Evidence," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(2), pages 93-115, June.
    4. Ireland, Peter N., 1994. "Economic growth, financial evolution, and the long-run behavior of velocity," Journal of Economic Dynamics and Control, Elsevier, vol. 18(3-4), pages 815-848.
    5. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    6. Fischer, Stanley, 1983. "`Optimal fiscal and monetary policy in an economy without capital' by Robert E. Lucas and Nancy L. Stokey," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 95-99.
    7. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. " Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    8. David B. Humphrey & Lawrence B. Pulley & Jukka M. Vesala, 1996. "Cash, paper, and electronic payments: a cross-country analysis," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 914-941.
    9. Humphrey, David B & Kim, Moshe & Vale, Bent, 2001. "Realizing the Gains from Electronic Payments: Costs, Pricing, and Payment Choice," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 216-234, May.
    10. Callado Muñoz, Francisco José & Utrero González, Natalia, 2004. "European payment systems and monetary union," Journal of Financial Transformation, Capco Institute, vol. 12, pages 85-92.
    11. Sheri M. Markose & Yiing Jia Loke, 2003. "Network Effects On Cash-Card Substitution In Transactions And Low Interest Rate Regimes," Economic Journal, Royal Economic Society, vol. 113(487), pages 456-476, April.
    12. Callado Muñoz, Francisco José & Utrero González, Natalia, 2007. "Towards economic and monetary union: changing trends in payment systems for new European members," Journal of Financial Transformation, Capco Institute, vol. 20, pages 168-174.
    13. Glenn B. Canner & Charles A. Luckett, 1992. "Developments in the pricing of credit card services," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Sep, pages 652-666.
    14. Scholnick, Barry & Massoud, Nadia & Saunders, Anthony & Carbo-Valverde, Santiago & Rodríguez-Fernández, Francisco, 2008. "The economics of credit cards, debit cards and ATMs: A survey and some new evidence," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1468-1483, August.
    15. Marek Dabrowski & Artur Radziwill, 2007. "Regional vs. Global Public Goods: The Case of Post-Communist Transition," CASE Network Studies and Analyses 0336, CASE-Center for Social and Economic Research.
    16. Lucas, Robert Jr. & Stokey, Nancy L., 1983. "Optimal fiscal and monetary policy in an economy without capital," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 55-93.
    17. Humphrey, David B., 2010. "Retail payments: New contributions, empirical results, and unanswered questions," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1729-1737, August.
    18. repec:hrv:faseco:30728041 is not listed on IDEAS
    19. Hromcová, Jana, 2008. "Learning-or-doing in a cash-in-advance economy with costly credit," Journal of Economic Dynamics and Control, Elsevier, vol. 32(9), pages 2826-2853, September.
    20. Ireland, Peter N, 1994. "Money and Growth: An Alternative Approach," American Economic Review, American Economic Association, vol. 84(1), pages 47-65, March.
    21. Laura Rinaldi, "undated". "Payment Cards and Money Demand in Belgium," International Economics Working Papers Series ces0116, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics.
    22. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Pablo Gálvez & Petr Mariel & David Hoyos, 2016. "Análisis de la demanda residencial de los servicios básicos en España usando un modelo QUAIDS censurado," Estudios de Economia, University of Chile, Department of Economics, vol. 43(1 Year 20), pages 5-28, June.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:19:y:2012:i:18:p:1799-1805. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.