Abstract
This paper applies spatial econometrics in relation to hedonichouse price modeling. Some basic spatial model alternatives areused for a battery of relevant tests. Geographically-weightedregression, semiparametric analysis, and the mixed spatialDurbin model are also applied. The purpose is to detect missingspatial variables, misspecified functional form, and spatialheterogeneity in estimated parameters. Such misspecificationshave been shown to give spurious results in relation to somefrequently used directional based tests. Significant modelimprovement is achieved, so the paper should be of generalinterest as an example of practical econometric modeling withinthe field.
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