Spatial Autocorrelation and a Demand Model for Unit Values

Lahatte, Agenor

Spatial Autocorrelation and a Demand Model for Unit Values - 2010.


92

We discuss the quantity and quality model proposed by Deaton (1987, 1988, 1990) for analyzing household demand from unit value data, with spatial structures of agents’ decisions. A combination of Deaton’s methodology (1987, 1988, 1990) and Kelejian and Prucha’s procedure (1999) provides a method for estimating the spatial versions of Crawford, Laisney and Preston’s model (2003). However, this approach is problematic for identifying spatial parameters and requires spatial matrices with special structures. We conclude with a Monte Carlo study to illustrate the difficulties in estimating spatial autoregressions.

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