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A spatial cost of living index for Colombia using a microeconomic approach and censored data

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  • Laura H. Atuesta
  • Dusan Paredes Araya
Abstract
This article describes a methodology to calculate a Spatial Cost of Living (SCOL) index using the Colombian data for 2006 that considers the microeconomic behaviour of households. Estimating an Almost Ideal Demand System (AIDS) to recover the expenditure function of the 23 main Colombian cities, the index is compared to the fixed basket approach and to an alternative methodology proposed by Romero (2005). This comparison suggests that the index is biased when the substitution effects are not considered, and this bias increases when the difference in expenditure levels between cities increases. According to our calculations, Bogota is still the most expensive city in the country.

Suggested Citation

  • Laura H. Atuesta & Dusan Paredes Araya, 2012. "A spatial cost of living index for Colombia using a microeconomic approach and censored data," Applied Economics Letters, Taylor & Francis Journals, vol. 19(18), pages 1799-1805, December.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:18:p:1799-1805
    DOI: 10.1080/13504851.2012.657347
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    Cited by:

    1. Martijn Burger & Martijn Hendriks & Elena Ianchovichina, 2022. "Happy but Unequal: Differences in Subjective Well-Being across Individuals and Space in Colombia," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(3), pages 1343-1387, June.
    2. Elena Lasarte Navamuel & Fernando Rubiera Moroll & Dusan Paredes, 2014. "City size and household food consumption: demand elasticities in Spain," Applied Economics, Taylor & Francis Journals, vol. 46(14), pages 1624-1641, May.
    3. Elena Lasarte Navamuel & Dusan Paredes & Esteban Fernández Vázquez, 2012. "A true cost of living index for Spain using a microeconomic approach and censored data," Documentos de Trabajo en Economia y Ciencia Regional 26, Universidad Catolica del Norte, Chile, Department of Economics, revised Aug 2012.
    4. Elena Lasarte Navamuel & Esteban Fernández Vázquez & Fernando Rubiera Morollón, 2017. "Higher cost of living in urban areas? An AIDS-based analysis of food in Spain," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1665-1677, November.
    5. Pablo Gálvez & Petr Mariel & David Hoyos, 2016. "Análisis de la demanda residencial de los servicios básicos en España usando un modelo QUAIDS censurado," Estudios de Economia, University of Chile, Department of Economics, vol. 43(1 Year 20), pages 5-28, June.
    6. Cortes, Darwin & Gallegos, Andrés & Perez Perez, Jorge, 2021. "The Spending Responses to Adverse Health Shocks: Evidence from a Panel of Colombian Households," SocArXiv vh2qa, Center for Open Science.

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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