Title: Sub-national price indexes for housing: Methodological issue and empirical analyses for Italy
Authors: Tiziana Laureti - University of Tuscia (Italy)
Luigi Biggeri - University of Florence (Italy)
Ilaria Benedetti - University of Tuscia (Italy) [presenting]
Marco Brandi - Sapienza University (Italy)
Abstract: Spatial price indexes (SPIs) measuring differences in price levels across regions within a country are essential for comparing real income and standards of living as well for measuring poverty and rural-urban differences. The issue of computing sub-national SPIs has been discussed extensively in literature and the importance of constructing sub-national SPIs has been acknowledged also in the research program of the international comparison program coordinated by the World Bank. Housing is the largest expenditure item in the household budget, especially for poor households, for which rents weight approximately 40\%-50\% of their total consumption expenditures. Therefore, computing spatial price indexes for house rents (SPIHRs) acquires considerable importance in the context of poverty measurement. However, systematic attempts to compile SPIHRs on a regular basis have been hampered by data unavailability. The aim is to focus on the methodological and empirical issues which arise when computing SPIHRs. By using data on house prices and rents produced by the Italian revenue and tax agency every six months, concerning all the Italian municipalities we estimated SPIHRs for different housing types. With the aim of accounting for spatial dependencies in house rents we include adjustments that incorporate spatial autocorrelation in the stochastic approach to spatial price comparisons.