st: Is a multilevel model appropriate?

[Jennifer Day <jennieday@gmail.com>]

Hi out there,

I have district-level data on a country, and am interested in the
effects of metropolitan size on economic growth for districts that are
members of a metro region.  Metropolitan regions contain more than one
district.  Thus, I am interested in the effect on a district's growth,
of being a member of a large, medium, small, etc, metropolitan region.

My question is, is this an appropriate use of a mixed-level model?
There really is no random effect, as the district-level observations
are not samples of a larger population.  Are my standard errors biased
by the various levels if I use OLS, or is any part of BLUE
compromised?  Is there an alternate model that is appropriate?

The regressions are structured like this:

Growth in GRDP per capita (2001-04) = f[ initial GRDP,
infrastructure indicators from 2001,  human capital indicators from
2001,  natural endowment indicators from 2001,  capital indicators
from 2001, size of metropolitan agglomeration in 2001].

Thanks!
jennie
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