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

Listed author(s):
  • Víctor Iturra

    ()

    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

  • Dusan Paredes

    ()

    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

Registered author(s):

    The aim of this article is to build a spatial housing price index for the Chilean communes (the commune political body similar to a municipality or county). The first step is to recover hedonic prices of three housing attributes by estimating a mixed index model (Bowden, 1992) using a generalized method of moments procedure. Secondly, a censored almost ideal demand system (Deaton and Muellbauer, 1980) is estimated to build expenditures for every commune 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 housing prices among Chilean communes and the axiomatic approach tends to understate spatial index compared to economic approach.

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    File URL: https://sites.google.com/a/ucn.cl/wpeconomia/archivos/WP2011-01.pdf
    File Function: First version, 2011
    Download Restriction: no

    Paper provided by Universidad Catolica del Norte, Chile, Department of Economics in its series Documentos de Trabajo en Economia y Ciencia Regional with number 11.

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    Length: 18 pages
    Date of creation: May 2011
    Date of revision: May 2011
    Handle: RePEc:cat:dtecon:dt201101
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    1. 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.
    2. 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.
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