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Coro Chasco and Julie Le Gallo
''Hierarchy and spatial autocorrelation effects in hedonic models.''
( 2012, Vol. 32 No.2 )
Hedonic housing price models should deal with spatial autocorrelation in order to avoid bias and inconsistency in the coefficient estimates. Multilevel models have been presented as a way of properly considering the effects of neighbourhood amenities operating at different spatial hierarchies. In this paper, we test this feature by specifying a three-level model for a dataset on downtown Madrid, which includes spatially lagged explanatory variables. The results show that hierarchical models are not capable of fully capturing spatial autocorrelation so that more effort should be done in developing the appropriate spatial multilevel models.
Keywords: hedonic models, hierarchical data, multilevel models, spatial autocorrelation
JEL: R2 - Urban, Rural, and Regional Economics: Household Analysis: General
C2 - Single Equation Models; Single Variables: General
Manuscript Received : Oct 29 2011 Manuscript Accepted : May 15 2012

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