RT Journal Article
SR Electronic
T1 An Alternative to the Standard Spatial Econometric Approaches in Hedonic House Price Models
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 386
OP 409
DO 10.3368/le.91.2.386
VO 91
IS 2
A1 Kathrine von Graevenitz
A1 Toke Emil Panduro
YR 2015
UL http://le.uwpress.org/content/91/2/386.abstract
AB Omitted, misspecified, or mismeasured spatially varying characteristics are a cause for concern in hedonic house price models. Spatial econometrics or spatial fixed effects have become popular ways of addressing these concerns. We discuss the limitations of standard spatial approaches to hedonic modeling and demonstrate the spatial generalized additive model as an alternative. Parameter estimates for several spatially varying regressors are shown to be sensitive to the scale of the fixed effects and bandwidth dimension used to control for omitted variables. This sensitivity reflects the uncertainty associated with the estimates when the appropriate spatial scale of the controls is unknown. (JEL Q51, Q52)