Hedonic Prices Indexes for New Passenger Cars in Portugal (1997-2001)
AbstractThis paper evaluates the effects of quality change on the price index for new passenger cars in Portugal for the years 1997-2001. Hedonic regression models are studied, giving particular emphasis to the relation between the form of the price index and the specification of the hedonic equation and estimation method used. It is argued that when log-linear hedonic functions are used the effects of quality change should be evaluated using a method akin to the Oaxaca decomposition (Oaxaca R., 1973, "Male-Female Wage Differentials in Urban Labor Markets", International Economic Review, 14, 693-709), rather than using the traditional dummy variables method. The results of the empirical part of the paper indicate that the CPI component corresponding to the sales of new passenger cars may have been overestimated by as much as 2.2 percentage points per year. This corresponds to an overestimation of the overall CPI by about 0.15 percentage points per year. As a by- product of this analysis it is also possible to conclude that the quality of new cars sold in Portugal increased on average 4.8 percent per year during this period.
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Bibliographic InfoArticle provided by Banco de Portugal, Economics and Research Department in its journal Economic Bulletin.
Volume (Year): (2002)
Issue (Month): ()
Other versions of this item:
- Reis, Hugo J. & Santos Silva, J.M.C., 2006. "Hedonic prices indexes for new passenger cars in Portugal (1997-2001)," Economic Modelling, Elsevier, vol. 23(6), pages 890-908, December.
- Hugo J. Reis & J.M.C.Santos Silva, 2002. "Hedonic Prices Indexes for New Passenger Cars in Portugal (1997-2001)," Working Papers w200210, Banco de Portugal, Economics and Research Department.
- Hugo J. Reis & J.M.C. Santos Silva, 2003. "Hedonic Prices Indexes for New Passenger Cars in Portugal (1997- 2001)," Econometrics 0303003, EconWPA.
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
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