  Empirical analysis in economics often faces the difficulty that the data is
correlated and heterogeneous in some unknown form. Spatial parametric
approaches have been widely used to account for dependence structures, but the
problem of directly deal with spatially varying parameters has been largely
unexplored. The problem can be serious in all those cases in which we have no
prior information justified by the economic theory. In this paper we propose an
algorithm-based procedure which is able to endogenously identify structural
breaks in space. The proposed algorithm is illustrated by using two well known
house price data sets.
